When Dan Myers and his partners capitalized Bridge Bank N.A. in 2001, it was the largest new bank IPO in the state of California at the time. More impressively, they did it during the most brutal economic downturn in Silicon Valley’s history. Even then, the biggest challenges were still ahead.
“We expected to grow rapidly, and based on experiences at other banks that were also somewhat recognized as high growth models, we understood and appreciated that we would transition rather quickly from a de novo, to a $250 million bank, to a $500 million bank to $1 billion bank, and the infrastructure and risk management challenges inherent in each of those milestones were significant,” says Myers, the founding president and CEO of the San Jose-based company.
In addition to its differentiated business model, which focuses exclusively on business – not on retail, the bank’s strategy involved executing a high-growth business model. From the beginning, the founders were cognizant that the company needed to be able to handle change extremely well if it were going to be successful with this vision.
“We had to be adept at change because regardless of economic environment, the company was going to go through some accelerated phases of growth in an accelerated manor that demanded we be good at change,” Myers says.
To ensure that everyone in the company was proficient at change management, Myers and his team knew they needed to weave it into the culture of the bank itself.
Stay several steps ahead
To handle the continuous change that comes with fast business growth, Myers realized that the bank couldn’t afford to not plan ahead when it came to its strategies, infrastructure and growth goals.
“You have to think ahead, not only a couple of quarters or to the end of whatever fiscal year you’re operating in,” Myers says. “You have to look down the road one to five years, which most banks do on a strategic basis. But their five years we’d be looking at in one to two years.”
Proactively building up your infrastructure prepares your company for fast growth by enabling a smoother transition from one phase of growth to the next. This allows you to focus your attention and resources on the core business, such as finding good clients that fit your target profile, soliciting new business and producing the results for its shareholders, rather than trying to constantly re-adapt a long-term strategy.
“We would never want to be in a position where we’re playing catch-up,” Myers says. “So we’d build infrastructure, we’d build capabilities before we actually needed them. When it came time to execute at that higher level, from an internal cultural management perspective, we would already be there.”
To develop a culture of forward-thinkers, it’s important to talk to employees about what kind of growth you are anticipating so they understand why it is important to create a culture that is accustomed to change.
“A lot of that success was focused on explaining that to the bankers that we had already hired, the founders and making sure that as we brought people in they understood not only were we going to execute a sound bank business plan but we were going to do it in a way that would anticipate this high growth and prepare for it,” Myers says.
Myers and his team also spend a lot of time talking to employees, customers and stakeholders about how the company’s value proposition is being received by clients and the bank’s more active referral sources in the community – that includes professional services groups such as CPAs, attorneys, venture capitalists and investment bankers, in addition to the management of all the companies who bank with Bridge Bank on a direct basis.
Having this dialogue is helpful to stay on top of trends and shifts in thinking among key groups in your industry, allowing you to adapt proactively.
“We took it a level higher and said we want to be even more differentiated in that we’re going to be the only true professional, business bank operating at the community bank level in our region,” Myers says.
“So it’s the constant, ongoing conversation are we offering the value proposition, products, services that are relevant in doing what they’re supposed to do for their clients,” Myers says.
The company recently expanded this effort to include brand analysis, which seeks input from its stakeholders and also from prospects that it didn’t manage to turn into customers.
In today’s tough environment, it isn’t easy to attract new clients and retain them for growth, so it’s critical to be part of the industry conversation if you want to be successful tomorrow.
By planning ahead, the bank has been able adapt quicker than many competitors in times of great change, including through two significant economic downturns.
“It’s making sure that we’re questioning those out in the market and getting feedback to expand our target,” Myers says.
Be clear on strategy
When looking at how to set up Bridge Bank, Myers and the other founders analyzed the structure and organization of other local de novo banks — banks that have been in operation for five years or less. What they figured out was that in California, the average de novo community bank would grow to anywhere from $300 million to $500 million in size in a 10-year period. Yet Bridge Bank planned to grow even faster than that.
“We were intending to be roughly double that in the same amount or a lesser amount of time,” Myers says. “So our time horizons were moved up a little bit with the same challenges imbedded in them.”
To execute this growth efforts, he felt it was even more important that the company set clearly defined goals for the bank and its employees for how they would achieve growth.
“You need to understand your organization, not only what it really is — and that’s a challenge, too — but where you intend it to go,” Myers says.
He says that much of his time goes toward developing a culture and communication system to make sure the growth strategy and vision remain clear for everyone.
“There can be a disconnect that develops over time,” he says. “You simply have to encourage the folks that you rely on to run various aspects of your business to keep you informed in an accurate way so that you can manage accordingly.”
It’s beneficial to have a communication system that provides top level management accurate, honest input and feedback so that your top leadership can best understand the organization as it matures. Because fast growth companies tend to be adding new employees all the time, part of that involves devoting significant time and resources to encouraging open communication within your organization.
In other words, talk to people.
“I know it’s a simple concept, but as you grow very rapidly you have people coming in from different organizations,” Myers says. “You have a constant mix and evolution of culture. You really have to proactively develop lines of communication, methods of communication and provide people with the tools to communicate effectively.”
This helps you avoid falling into what Myers calls the “big bear trap” of pursuing areas that are not consistent with your primary model, a pitfall he’s observed for many banks.
“Over the years, it’s been important to remind our folks from top to bottom in the organization that it’s not only critical to focus on what we said we’re going to do,” he says. “It’s to have the discipline to stay away from things that we know are not complementary, which again is running counter to what most other larger banking organizations have done even in the last 10 years.”
Engage people in decision-making
As the second or third startup for many of its founders, Bridge Bank has had the benefit of an experienced leadership team throughout its growth. Yet from this experience, Myers and his partners have also learned that leaders cannot be the only ones coming up with ideas if they want their company to flourish. It is collaboration at all levels that gives companies the greatest advantage when planning for the future.
“Our best solutions for managing the challenges as the company continues to grow don’t necessarily come from the top,” Myers says. “Some of the best ones come from team building and teamwork at all levels of the company, top to bottom, as they work at their own individual levels on different aspects of those challenges.”
By asking people to play a more active role, you empower them to make decisions so they can take initiative to solve problems and come up with solutions or ideas proactively. Being able to acquire clients and build the bank’s business today relies on this efficiency in decision-making. Therefore, the bank’s culture is built around continuous improvement and finding new ways to grow its value proposition, no matter what the economic climate looks like.
The No. 1 driver of this culture is recognition, both verbal and financial.
“It lets us all continuously look for ways that we can improve everything that we do in a positive, constructive context so that we can execute better, we’ll take better care of our clients and we’ll have better performance not only for our shareholders but then how that comes back to our employees in terms of the ways they benefit with their relationship to the bank, including compensation,” Myers says.
“Although we have an economic recovery under way, it’s tepid at best. Therefore, your growth aspirations are really driven by your competitive positioning and abilities to take business from competitors. The overall growth in the economy isn’t going to float all boats.”
Engaging people in your company’s growth goals is more successful when it comes in the form of enthusiasm rather than censure. When you reward people for bringing ideas to the table about how your company can improve its performance, it helps them engage in innovation as a challenge to do better rather than a disapproval of the way thing are being done.
“Unfortunately in some companies it is a form of criticism,” Myers says. “You can do this better — do it better.
“Going hand-in-hand with the collaboration and teamwork, if they identify a challenge within the company, we encourage them to recommend a solution and a way of dealing with that challenge at their level with decision-making authority. That encourages an efficient resolution of whatever the challenges but also understanding that there’s accountability that goes with that.”
Today, Myers says the bank continues to focus on developing its bankers and its change management culture to stay competitively positioned for high growth.
Through continuous effort to take better care of its clients, the bank not only survived through the worst of the financial downturn but actually had its best years for new client acquisition and issuing new credit commitments. Over the last 10 years it has grown organically to some $1.2 billion in assets in 2011, an increase of $131.3 million from just the year before.
“It’s that core competency of change management that served us well when we launched in worst economic environment in Silicon Valley, which has since been bested by the great recession,” Myers says.
“When the banking industry as a whole was really taking it on the chin from a PR and creditability perspective, we had our best years at bringing new clients in, which I think says something about the validity of our value proposition, how it resonates in the market and how our people have executed in delivering that value proposition so that it’s appreciated for what it is.”
How to reach: Bridge Bank N.A., (408) 423-8500 or www.bridgebank.com
- Stay ahead of the game.
- Set clearly defined goals.
- Use teamwork to make decisions.
The Myers File
Founding president and CEO
Bridge Bank N.A.
Born: Dayton, Ohio
Education: DePauw University, liberal arts. Pacific Coast Banking School, Seattle, Wash.
First job ever: I bailed hay part time.
First job after college: Pacific Valley Bank in San Jose, Calif., as a reconcilement clerk
Who are your heroes in the business world and why?
Entrepreneurs. They have the vision, the can-do-anything attitude, and perseverance that is the basis for new company and new job creation, even in the face of monumental challenges in today’s environment.
What do you do to regroup on a tough day?
Take our golden retriever, Belle, on a long walk. She’s a good listener.
What is your favorite part of your job?
At Bridge Bank, I get to meet and work with so many exceptional and interesting people, including the entrepreneurs, business owners and all of the top tier career professional business bankers that have joined me at Bridge Bank.
The fact that Tom Strauss sees some major flaws with the national health care system shouldn’t just raise eyebrows for hospitals or the patients in them. As CEO of one of the largest integrated healthcare delivery systems in Ohio — employing 10,000 people and more than 1,000 physicians across seven hospitals — Strauss knows the problem is one that affects every person in the country.
“I think everybody would admit that what we have in health care in this country today is unsustainable,” says Strauss, the president and CEO of Akron, Ohio-based Summa Health System. “When you’re spending $2.5 trillion, 17.6 percent of the GDP on health care and the health premium now for a family has exceeded what a minimum wage worker makes in a year — think of that … it’s going to affect the way that we do business.”
The glaring problems with the current care model have been compounded by the increasing number of people without health insurance, which creates a shrinking base of patients from which hospitals can generate any income — the sick ones.
“We’re really a sick care system, which means when we get paid traditionally in hospitals, it’s only by treating a bunch of sick patients,” Strauss says. “So if a good flu season rolls in … our beds are full and we’re billing a lot of revenue, but we have a lot of sick patients. There’s something wrong with that picture.”
With mounting costs, anticipated reimbursement declines and payment model that rewards based on sickness rather than health, Strauss and his team finally said enough is enough. After spending two years devising a new vision for the organization to evolve and improve the system, Summa Health launched a pilot program for an accountable care organization, called NewHealth Collaborative. In January 2011 it moved 11,000 patients in its SummaCare Medicare plan to the new collaborative.
“Some of these places are holding onto the revenue as long as they can because they believe there is a way to survive that,” Strauss says. “We don’t think there is.
“So with us, it’s what do you do to transform yourself to focus differently to create true value in health care.”
Here’s how Strauss has led the implementation of the accountable care vision across the seven hospitals.
Because Summa Health is one of the first organizations in the community to create a prototype for accountable care organizations, Strauss knows it will be an example for future organizations in the way it implements its vision and strategy. To make sure the shift toward population health management is successful, one of the first steps is putting in place the right tools, processes and infrastructure to support it.
“You’ve got to know where your vision is, where you’re going and what your objectives with the strategy are and then put in place the executing tactical plans to make that happen,” Strauss says.
Strauss says that a key problem with the old system of that care was it could be very fragmented. With different physicians in charge of different services, handing off tasks and having limited knowledge of a patient’s needs, an estimated 30 percent of what is conducted in health care and in hospitals today is unnecessary.
So part of the transformation has been changing the organization’s siloed infrastructure to create multi-disciplinary approach to services, eliminating the overtreatment of patients and saving costs by keeping everyone on the same page, including the patient.
“People like me have to start to prepare ourselves structurally to be able to do these things for population health and population management,” Strauss says.
“What’s nice is it’s easier to do the right care, the appropriate care, and eliminate this 30 percent that’s unnecessary than to not do it. So we’ve made it easier for physicians to do that.”
Frequently inefficiency is the result of lack of communication and knowledge-sharing. So a critical step to becoming more organized and efficient is looking for ways to improve your technology.
“Some organizations are used to living on very high revenues,” Strauss says. “When you realize that eventually that is going to go away, you have to reposition your organization to be able to function at lower rates of reimbursement.”
Strauss says that the organization is investing $80 million in IT over the span of five years. It has already added a new call center so physician’s phones roll over to the 24/7 call center with care nurses during off hours. The system’s Akron City and St. Thomas hospitals also became some of the first in the country to have computerized physician order entry so physicians can access and manage orders through a portal at any time.
The other piece was implementing new evidence-based medicine protocols and procedures in the care delivery process to integrate the 10 service lines for increased efficiency.
By structuring your organization for more effective collaboration, you can align the people on shared goals and your new vision. At the same time, you give people a clearer idea of how their role contributes to the big picture of your mission and vision.
“Those are the kinds of structures that you have to have in place to be able to thrive under this new health care reform move towards population health and population management,” Strauss says. “So it’s more than just technology.”
Be an open book
Once they came up with the model, Strauss and his leadership team presented it to the physicians and the board and held retreats to walk employees through the vision, its benefits and how the transformation would occur.
“I think most physicians understand that the old way of doing things is not very effective,” he says. “The days of fee-for service — the reimbursement is just going to be cut and cut and cut. It will be death by a thousand cuts. They understand they can’t survive the way that it is today, so we have to do something differently.”
With most people on board, the real challenge was making sure the 400 physicians and other employees involved could understand, execute and share the vision. Developing strong partnerships among the hospitals and other care providers requires strong alignment on goals as well as new patient care protocols and procedures. So for Strauss, the key to success has been having the organization be as open as possible with employees about the vision, what it involves and any changes being asked of them.
“It’s creating a vision for the future and getting people to understand what that vision is and then educating the components to engage in that process when it might be different than what they were used to in the past,” Strauss says.
“If you don’t, and they don’t believe in where you are going you will be unsuccessful. So for us, we really took the time and even after it was implemented went back to reinforce the vision of why this is so important.”
By explaining how a new vision complements your organization’s core values, mission and culture, you can get more buy-in by aligning people behind shared goals as well as a shared culture. So aside from instituting training and education programs for employees, Strauss has spent a lot of personal time working to put the vision into a clear framework. His efforts include teaching a class for employees called “The Philosophies of Summa,” speaking at monthly new employee orientations and hosting monthly “Talks with Tom” for several hundred employees with representatives from each department.
“There are no secrets,” Strauss says. “I give them financials. I talk about what’s happening good and bad and ugly, and it’s been very effective. It’s information. It’s listening. It’s being by their side and nurturing them when they are down.
“We believe that the employees that work here are the soul of the firm. Your employees represent your greatest strength or your greatest weakness. So they have a culture that supports them — servant leadership — and it says if I’m not serving that patient I’m going to serve you.”
Strauss says that another goal of the open communication is to reciprocate the attitude and culture he wants to drive in the system, which is one of servant leadership and mutual caring.
“The moment of truth is the first 15 seconds when you come in contact with a patient in need, and it’s how you seize that moment to make the difference to satisfy their needs,” he says.
“If you’re too busy or you’re having a bad day or the Browns lost or the Steelers lost, and you translate that at work to your patient, we will fail as an organization.”
To strengthen the mindset they want all employees to have, Strauss has charged managers to be more active in talking to employees and patients to see what their needs are and helping them carry out the vision for accountable care.
“If you’re engaging your work force to go after a vision, then you need to give them as much information as you can about the reason for that vision,” he says. “That’s one of the pieces that I love to do.
“We’re actually making a concerted effort to do rounding with a purpose. You’re going to see every leader at Summa being out more on the floor talking to patients, talking to employees both on satisfaction and safety.”
But once you give people the information, you then want them to drive its success as much as possible. To help employees feel like they have a stake in that vision so they will drive it with enthusiasm, Summa Health has tied more employee financial incentives to the positive patient outcomes it’s seeking from the new care protocols and procedures.
For example, all employees in the system receive a bonus each year based on the company’s financial performance and levels of patient satisfaction.
“We’ve paid out millions of dollars to the employees,” Strauss says. “This is beyond managers. This is all of the employees. We want them to feel like if they produce, if they work with us, if they exceed the expectations of the patients — that’s the definition of quality — they will benefit, their organization will benefit, and we will be the provider and employer of choice.”
Eventually, seeing the positive results of changes helps employees realize that your vision is a viable one.
As a result of its technological innovation, the NewHealth Collaborative received 2012 certification from the federal government for its ability to meet standards of meaningful use guidelines. Its Akron City and St. Thomas Hospitals will acquire $5.1 million in federal incentives, which will be distributed to the hospitals and its doctors.
“In the old days you would just throw services out there and market those services and try to grow this population of sick patients,” Strauss says. “Now we’re going to get paid on the population’s health.”
Although he’s been with Summa Health for 13 years, Strauss believes that the organization is just starting to scratch the service in the excellence it can achieve by transforming the community’s health. Despite the uncertain future of health care reform, he sees more and more people are now realizing that action needs to be taken to change the industry.
“When you deliver that kind of quality and safety and you see the savings we’re starting to generate, you realize that there’s an answer here,” Strauss says.
How to reach: Summa Health System, (800) 237-8662 or www.summahealth.org
1. Put the structures in place to implement your plan.
2. Help infuse the vision with transparency and an open-door policy.
3. Offer employee incentives to drive results.
The Strauss File
President and CEO
Summa Health System
Education: Duquesne University for undergraduate and graduate schools. B.S. in pharmacy in 1975 and a doctorate of pharmacy in 1978
What do you like most about working in health care?
That you are caring for patients at their most vulnerable time, you can make a difference in every patient’s life and you can make a difference in employees’ lives. We’re the largest employer in five counties, so for us we take that pretty seriously. And improve the health status of the communities, not only once you educate and take care of patients but you can go out into the communities and you can make a difference.
What mistakes can you make in a growing business?
The first thing you’ve got to realize is that you can’t make everybody happy. That’s the hard one, especially for somebody like me who really prefers to have people holding hands singing ‘Kumbaya.’ The other area is trying to micromanage. You cannot in this environment micromanage. You’ve got to empower your people and let them go. They will make mistakes and that’s OK as long as they learn from their mistakes. I would think trying to stay in the old system, trying to stay in the old ways was a mistake that got us starting to transform toward population health and population management.
What’s the best business advice you’ve received?
Love what you do. If you think about the hours we all work, that gets pretty challenging if you don’t love what you do because I probably put in as many hours here as I do at home, unfortunately. So that’s one. Make sure you love what you do, and if you don’t love what you do, go find something you will.