on becoming an ambidextrous organization october 2015 ryan frederick special presentation to:
TRANSCRIPT
On Becoming an AmbidextrousOrganization
October 2015
Ryan Frederick
Special Presentation to:
Section I:
Where Have We Come From and Where Are We Now?
Page 4
Penetration Rate: Flat
900K units 500K units 1.5M units
2.9M units
Penetration Rate of 15% of 75+ Population
85% of 75+ Population
Note: Based solely on Independent Living and Assisted Living units, penetration rate is closer to 7%.Source: NIC Investor Presentation 2012; NIC Investment Guide, Investing in Seniors Housing & Care Properties, 2nd Edition, 2012
Aging in Place is the Prevailing Trend with Important Implications to Existing Models
Aging in PlaceWithin
Seniors Housing
Older Residents
Higher levels of Acuity
Shorter Length of Stay
Greater Pressure on Staff
Losing Appeal to Younger Prospects
Sales & Marketing Not as Effective
Smaller Addressable Market
Diminishing Value Proposition
Note: “Aging in Place” refers to the desire of seniors to stay in a particular residential setting as long as possible, even as health care needs increase.
KeyImplications
Note: Additional information on aging in place can be found within the white paper “Why Aging in Place Matters”. A one-page executive summary is available at www.pointforwardsol.com.
Consumers have a strong preference to age at home rather than in
an institutional setting – nearly 90% prefer home (AARP, 2010)
Page 6
Increasing Age of Entry into Seniors Housing
Average Age at Move-In for Independent Living Residents
Source: American Seniors Housing Association (ASHA) – Independent Living Report
Page 7
Example of Impact of Aging in Place: Sales & Marketing
Resident Turnover Smaller Market
Historical
Length of Stay:10 to 12 Years
1x
Today
Length of Stay:5 to 6 Years
2x
Historical
(a) Geographic
1x
(b) # of people aged 75-84
12.4M
1x
X Mile Radius
Today
(a) Geographic
0.25x
(b) # of people aged 80-89
7.7M
0.6x
X/2 MileRadius+
Combined Effect: May require over 10x Productivity in Sales & Marketing to Maintain Occupancy
=
Note: This is an exercise using hypothetical numbers that approximates the combined impact of greater resident turnover and smaller addressable market for entrance fee CCRCs. It assumes that communities that experience Aging in Place have: approximately ½ the length of stay, reach ½ the geographic distance from the community as before and cater only to ages 80 to 89 (vs. ages 75 to 84). Population figures from 2010 US Census.More detail available on impact of Aging in Place within white paper “Why Aging in Place Matters” Page 8
Page 9
Question #1:
For our field of Seniors Housing & Care (i.e., think Housing & Services), what has you most excited?
Most concerned?
Page 10
Section II:
What Might the Future Look Like in an Aging America?
Page 11
“What this [demographic shift] means for housing is that the past cannot be relied upon as a predictor of the future… What they [Silent and Leading-Edge Boomers] will want is
likely to be quite different from what today’s housing communities for seniors provide, or they may instead find
new ways to obtain the support they need in their homes and age in place.”
Urban Land Institute’s Report “Housing in America: The Baby Boomers Turn 65”
Better, Faster, Cheaper
Role of Technology
Walkability
Intergenerational Interaction
Enhanced Programming
Design: Larger Units
Dining Experience
Ongoing Work, Education
Choice & Options (vs. Rules)
Price
Source: Compilation of key insights taken primarily from: “Senior Living for the Next Generation” by ASHA (2012), “Housing in America” by ULI (2012) and “Power of Infuence” by Zillner (2011).
Page 13
Exponential Growth in Smart Phones
Page 15
Internet of Everything
Page 16
Source: BI Intelligence estimates.
Perspective on the Future of HealthConvergence of Multiple Exponential Trends
Daniel Kraft: Medicine's future? There's an app for that: Video
Page 17
Innovation: Self-Driving CarArrival Expected in 2020
Page 18
Innovation: Food & Grocery Delivery
Page 19
Source: TechCrunch 7/11/15 – “The Billion Dollar Food Delivery Wars”
Innovation: Uber for Home Care
Page 20
www.smartliving360.com
LIVE TO A BETTER DEGREE
INNOVATION: SMART HOMES IN WALKABLE MIXED USE W/FLEX MODEL
Page 21
Question #2:
On the margin, do you see technology as more of a threat or opportunity for our industry?
Page 22
Section III:How Should We React?
Page 23
Types of InnovationDisruptive vs. Sustaining
“Disruptive Innovation” is an innovation that helps create a new market and
value network, and eventually goes on to disrupt an existing market and value
network, displacing an earlier solution.
“Sustaining Innovation” does not create new markets or value networks but
rather only evolves existing ones with better value, allowing the firms within to
compete against each other's sustaining improvements.
Source: Various materials and presentations from Clay Christensen including his website: http://www.claytonchristensen.com; Wikipedia on “Disruptive Innovation”
Page 24
Page 25
Risk of Disruptive Innovations… Again?
Price ($)
Quantity
Demand SNF
Skilled Nursing
Demand AL
Assisted Living
• More Attractive Product• Caring Culture• Less Regulated• More Affordable
QSNF
DSNFPSNF
D’SNF
Q’SNF
P’SNF
PAL DAL
D’AL
QAL
Demand’ SNF
• Product is Older, Less Attractive• Higher Acuity Population, Less Attractive• Increased Regulation• Less Affordable
Demand’ AL
Q’AL
P’AL
Disruptive Innovations:Real Estate & Services Based
Page 25
Ambidextrous OrganizationsAbility to Simultaneously Exploit and Explore
Page 26
Ambidextrous Organization
Exploitative Businesses Exploratory Businesses
Type of Innovation Sustaining Innovation Disruptive Innovation
Strategic Intent Cost, Profit Learning, Growth
Critical Task Operations, Efficiency Adaptability, New Products
Controls, Rewards Margins, Productivity Milestones, Growth
Culture Efficiency, Low Risk, Quality Speed, Risk Taking, Flexibility
Leadership Role Authoritative, Top Down Visionary, Involved
Note: Additional information available in Point Forward Solutions white paper “Making Innovation Work: A Blueprint for Seniors Housing & Care”
Question #3:
(a) Is your organization adequately prepared for the future? In other words, are you an ambidextrous
organization?
(b) If not, what’s holding your organization back?
Page 27
Point Forward Solutions Approach
Page 28
Q&A
Page 29