After over 27 successful years in the for-profit world of banking — in wealth management, to be exact — Norman (Norm) Potter had no idea that he would then face the biggest challenge of his career. But after being recruited and selected as Vice President/Chief Development Officer for Wake Forest Baptist Medical Center, that’s exactly where he found himself.
Here, Norm shares the story of how his for-profit experience brought fresh thinking to the famed academic medical center’s development department — and the insights he gained as his leadership skills were tested by this brand new (for him) nonprofit world.
Q: You entered the development profession in the middle of a very successful for-profit career. How did that come about?
A: Development really found me. I wasn’t looking for it necessarily. In retrospect, I look back over the 27 years I spent in financial services and realize what that did to prepare me to be in this world. Having been an EMT earlier in my life and serving on boards here at the medical center and in my community, I was very interested in the whole healthcare mission.
The CEO of Health Sciences at Wake Forest was one of the clients in the wealth management practice that I was running at the time. We were talking one day and he said, “We are going to be recruiting for a new chief development officer role and we want to bring a fresh perspective to the role. So if you are interested, why don’t you consider applying for this?” And I talked to my wife and we made a decision to enter into what turned out to be a 6-month process.
Q: Did anyone comment on your for-profit status at the time?
A: Yes, the search consultant they had hired looked at me and said, “You are so far out in left field with your background that if you want to go through this that is great, but just understand that you are an out-of-the-box candidate.” But I went through the process anyway and every step of the way continued to get validation that this was where I needed to be.
Q: What made you feel validated?
A: As I went through the interviews, I really reversed the dialogue and asked: “What is it about development here at Wake Forest that really needs to be changed?” And as we got engaged in these types of conversations I found that, number one, some of the skill sets I brought to the table were of real key interest to these people. It became clear that they were looking for someone with a really strong business background, who understood philanthropic planning and who also was oriented towards the urgency they thought was needed in the execution of strategy. In short, it seemed they were looking for someone who was less of a fundraiser and more of a person with strong business and team leadership experience.
In financial services at BB&T, we handled the philanthropic planning for very wealthy individuals and actually ended up representing these individuals for charities or universities, so I had a lot of experience with that side of the table. Working with individuals to help them realize their dreams through philanthropic planning and wealth transfer, then interacting on behalf of donors who wanted to remain anonymous and executing their strategy was something I had done, so I was not a total novice.
I think one of the other skills that transferred over was the ability to manage a team in a complex environment in an industry that was facing a lot of change. I had spent 27 years in an industry that was reinventing itself while managing complex teams, large budgets, etc.
Q: You’re talking about the banking industry, correct?
A: Right. During the last decade of my career there, between economic and regulatory issues, we went through a dramatic re-engineering of how services were delivered. The industry began consolidating through mergers and acquisitions as it became necessary to reduce expenses and remain highly competitive. These changes required us to constantly evaluate our business model and find new, innovative ways to deliver our services and remain connected to our clients.
As you look at healthcare today, we are in a very disruptive period as well. The healthcare industry is going through a major transformation as it works to improve the quality of the care delivered and reduce the cost associated with that care. Like banking, healthcare is also consolidating to reduce expenses and have more diversity in the population served.
Q: So you’re selected for the CDO position. What were some of the lessons learned from your early days at Wake Forest?
A: I think that my initial response coming into development in an academic medical center was a little bit of shock of how much consensus building was required to make decisions. There is an ambiguity working in an academic medical center that has a mission of education, clinical care, and research. I had to learn quickly how to navigate through that ambiguity and work with a large faculty base who all thought I reported to each of them individually!
Working in a corporation, there is delegated authority with a defined reporting structure and a high-level of accountability for your goals. The corporate environment I had come from was always in high gear for execution of strategy and a results-driven mindset. So for me, at Wake Forest, the first lesson learned was to slow down a little bit and develop an understanding of how to get things done effectively.
I inherited a development operation with wonderful staff which was not only underfunded, but also had no institutional strategic plan as a roadmap for the philanthropic mission. And so, the next big challenge was to understand the cultural nuances of our medical center and begin developing a strategic vision for philanthropy.
One of the greatest lessons learned was assuming that leadership had a good understanding of what a culture of philanthropy meant. Fundraising was viewed as something nice to have, but not strategic. My role as the CDO initially did not sit on any internal leadership committees. Nor did financial planning include any conversation pertaining to the impact of philanthropic revenue. Because of this, I spent significant time meeting with individual leaders trying to build an understanding of what they understood about philanthropy.
Initially this was a much slower process than I had expected. I learned quickly that I had to proactively represent the philanthropic mission across the entire medical center, advocate aggressively for budget and change and constantly ask to have the CDO position elevated into one which participated with leadership. On several occasions, I invited myself to leadership meetings for the purpose of developing an understanding of what was important and how philanthropy could make a difference. At this point in time, my role serves on the Executive Leadership team.
Q: You mentioned that you were selected as Wake Forest’s CDO in part for the new perspective you would bring to that role. Share some of that perspective.
A: I think one of the primary skills I brought to the position was my ability to lead a large, complex operation with significant budget authority in a highly urgent business environment. This required me to navigate daily through numerous issues, keep my teams on task and manage the interaction with corporate leadership. Additionally, my wealth management practice had given me significant experience dealing with various types of leaders in industry, government and community. Learning how to effectively communicate and build meaningful professional relationships with these kinds of people was invaluable.
These skills have been significantly put to the test as our medical center goes through a period of rapid transformation, expense reductions and refocus. We have been able to navigate through this level of change and keep our team and volunteers focused on advancing our campaign during really difficult times.
Q: What were some of the ways you’ve elevated your department’s role at Wake Forest?
A: Because I didn’t have an academic background, most important was building trusted relationships with the key leaders, faculty and staff. For the first six months, I took the time to meet with these people. It was all about listening to them and asking questions: “What do you think needs to change? What are you afraid I will do? And what do I absolutely need to do?” I approached these meetings from the standpoint of: I am seeking your advice. I earnestly went out and said: “Let me sit down and help you understand who I am, and I want to understand who you are and what you want to achieve here.”
I wanted these people to know that I believe in being very transparent and honest. We should always have a relationship that allows for open and honest conversation no matter what the issues might be. Transparency, honesty, integrity and empathy — all those values I truly believe helped move the needle forward.
Q: How did this approach impact your handling of staff?
A: When I came into the office, the entire senior and management team reported to me — about 20 people. I knew I wanted to get it down to where I had three direct reports. Not coming from traditional development, I met with every member of our team one-on-one. I wanted to understand their roles, what they wanted to see me do and for them to learn about me. I openly shared with our team that I was looking to them for guidance on all aspects of development and expected them to be very open and honest with me. I also began working on enhancing the credibility of the team and elevating the philanthropic role within the medical center.
Q: How long would you say that took you?
A: The first year was the toughest period of building the team, creating institutional awareness for the philanthropic mission and getting to a point where I could get budget support to begin recruiting several new senior players. After that, we began to focus on changing our process. That is where the journey began, really, in year two — when we started to gain and build trust and have meaningful dialogue with leadership about how we engage development at a much higher level.
Q: What did you do on those days when you heard a lot of “no’s” regarding your vision and what you wanted to accomplish?
A: The way that you survive anything is by having a support network and that support network is not only your peers in the office but also those that you share a safe zone with — where you feel comfortable and can discuss any issues.
It’s important to have tight relationships with faculty, staff and close confidantes – people that you can get constructive feedback from, who will not just encourage you but also chastise you when necessary. It’s also important to have that type of relationship with the governance and advisory boards and donors that support you.
Having a safety net to process through constantly lifts me and my team back up.
Q: Talk more about the advisory board that you rely on for support.
A: I have a fairly large group of people that I work closely with and that is truly my fall back for support and constructive feedback. These are people I have very strong professional relationships with, who allow me to be vulnerable and who are open to coaching me. I highly recommend it for any CDO in any environment — intentionally build that network. I have found that most professionals are very open to entering into that type of relationship with you. One of my board members has truly become a mentor. I meet with him monthly to talk about the issues I am faced with to get his perspective on how I am or how I need to handle them.
Q: Did you bring the advisory board concept with you to Wake Forest?
A: It is how I have run my professional career for many years, by having a professional network to keep me on track. My senior leadership team does the same. I encourage them to build a support network, with faculty, staff and community volunteers that they trust and who trust them and with whom they can confide.
Also, we have a senior leadership team environment in development where everything we say to each other stays with each of us. We can be very open and honest with each other. We believe that our role is to support each other. Our saying is, “We have each other’s back at all times.”
Q: How else do you keep staff “up” and motivated – especially during a “disruptive transformation,” as you call it, like the one facing healthcare right now?
A: There is no question that very open and honest communication is one of the keys to surviving this type of rapid change. My style is to tell my team absolutely everything I can about the current situation at hand. I expect our other leaders to do the same with their direct reports. I maintain an open door policy so that anyone can schedule time with me to talk about the issues at hand.
We have faced difficult days recently losing a beloved staff member to cancer and others due to budget reductions. We try to have an environment where we can be open about our feelings both good and not so good during these times. And, we try and celebrate any good news with the entire team. It’s not easy with the urgency of our work, but just walking around and visiting with team members during the day is very important.
On the professional development front, we try to allow staff to participate in both internal and external opportunities for personal and professional development. Being able to attend a conference for several days really helps staff recharge a bit.
Lastly, trying to have a sense of humor and encourage that with the entire team is imperative. We have found some very talented comedians on our staff!
On Donors:
Q: In Part One of this interview, you talked about the need to re-engage the donors at Wake Forest Baptist Medical Center. How did you accomplish this?
A: About nine years ago, this office managed almost 40 different advisory board meetings per year. We had advisory boards for several different areas such as: cancer, children’s health, regenerative medicine, etc. These were typically lunch meetings where faculty members and leadership told a story about important happenings in their areas of expertise. Development officers would share news about events or some aspect of fundraising for that area and the meeting ended.
We knew we had a problem. Our staff was involved in significant activity managing their respective advisory boards. Fundraising was not increasing in these areas. Our board members were loyal, but did not seem passionately connected to the mission. And, they were meeting-weary with many of these individuals serving on multiple advisory boards.
I brought in a consultant from the banking industry, one I had used before, who really knew how to analyze and understand engagement and why people want to be part of an organization. He did an in-depth survey with small group interviews which really pointed to our issues.
We had not engaged properly with our donors or community. We spent time listening to these people, who were basically saying, “They just want me to come write a check, hear their story, and go away.” That began a process where we completely transformed our volunteer and advisory group structure. We eliminated all individual advisory “boards” and created advisory groups for each area. Eliminating “board” from the title defining the responsibilities of these groups to support the philanthropic mission of the medical center was the beginning.
Job descriptions for advisory group leaders and members were created supporting this change. Our survey process also pointed to reducing the frequency of meetings and improving the content with volunteer leaders “owning” the meetings. We also wanted to create a sense of ownership of the mission with these groups. Twice each year, all advisory group members attend a Volunteer Leadership Convocation. These meetings are structured to look and feel like a shareholder’s meeting that public companies do annually. These meetings are completely volunteer-led. Engagement went through the roof!
At first, we had a lot of naysayers in the community and we lost some advisory board members because of this change. But we have built on this and it has been a very positive factor in engaging the community, leading to the recruitment of outstanding advisory group members who passionately own the medical center’s mission. As we launched the leadership phase of our campaign, these changes helped raise the level of philanthropic commitments we needed as we moved closer to the public phase.
Q: Were there other benefits to eliminating these meetings?
A: Absolutely. It allowed us to look at our gift officers and how they were spending their time. Turns out, they were focusing on major gifts activities less than 30 percent of the time because they were managing their advisory boards and a sundry of other tasks that were necessary, but could be better handled elsewhere. Our goal was to get the gift officers to a minimum of 70 percent of effort directed to major gift activities. By restructuring the advisory groups and reorganizing our department, we turned productivity around.
Q: You stated that your wealth management experience played into the streamlining of this process. How so?
A. Understanding your client base is the key to success in wealth management. That means knowing how they want to engage with you, listening to understand what is important to them, giving your client an ongoing “voice” in the relationship and delivering the kind of value that makes a positive difference for them and the institution.
When I came over to the not-for-profit side, I thought: We are dealing with lots of people who need to be highly engaged with us and feel that they are part of the mission – just like shareholders. These are people who are typically investors and shareholders in public companies who have high expectations as to how they are engaged and communicated with. So one of the keys to our growing development success has been creating that shareholder/investor mindset. We strive to treat our donors just like shareholders. We’ve seen a great positive change in their mindset as they take a much more active ownership role in our philanthropic mission.
On Consultants:
Q: It appears that you are a big believer in outside counsel. Why?
A: I will not engage with a consultant if all they do is tell me what I already know. But if they can show me how we can build greater value and effect a better outcome at a lower cost, faster – then it makes a lot of sense to be engaged to outside experts.
I have multiple examples of where we have used outside experts to move us forward. The advisory group changes came as a result of bringing someone in who was an expert in understanding how people engage with an organization. Our donor acquisition and retention strategies came as a result of a major partnership with several outside experts who brought capabilities we did not have on our team. This partnership met our definition of creating greater value faster at a lower cost than we could do internally. And, lastly, we are embarking on a new project using digital marketing to impact donor engagement, retention and e-giving with several other outside experts.
We constantly review our projects and processes to insure that outside experts are delivering what we need. If we can eventually achieve better results internally, then we do that.
Q: How was the decision to outsource received – and how did you overcome any objections?
A. In an environment that is as financially challenged as healthcare is today, all decisions to use outside experts are questioned. As most other CDO’s will understand, leadership in our organizations typically does not understand fundraising. They see you spend a dollar today and look for that dollar of revenue to offset it in the same year. We all know that is not how this works. My background in corporate finance has been helpful in assisting our financial leaders in understanding why you make these types of investments. I understand completely how they are looking at the financial world, so I am able to build a case to show them how fundraising will benefit in the short-term to long-term. I am currently working with our new CFO to design a set of metrics for development which will be incorporated into medical center financial planning for the first time ever, which will help us make these types of decisions easier going forward.
Q: Any advice to fellow CDOs who want to adopt that philosophy – but just aren’t sure about how to go about it?
A. Consultants and outside experts are there to accelerate what you are doing. That to me is the key. The development leader needs to fully understand what their department can and cannot do to achieve assigned goals. A good consultant or outside expert should only be engaged if they can help you elevate what you are doing faster, more efficiently and at a lower cost than you can do with internal resources.
A CDO needs to have a strong partnership with the financial and operational leaders within their institutions who will ultimately review and approve these decisions. Develop a strong understanding of how they are looking at financial and budget management so that they can be educated on how these types of investments move the needle forward on generating philanthropic revenue. I’m a strong believer of calling philanthropy “revenue” with these people. That’s the world they live in daily and it helps frame out what we do in a way they understand. Once financial and operational leaders understand the impact of philanthropic revenue to the mission, getting support for these decisions is easier.
On the Current State of Healthcare:
Q: Business aside, you’ve said you’ve always had an affinity for healthcare and the not-for-profit world in general. Talk about that commitment.
A: I don’t think you become a CDO or development person in healthcare if you don’t have the absolute altruist belief in helping people’s lives. That is how I am wired, as is the majority of our team.
We remind ourselves of the fact that we can go to bed at night knowing that all the hard work we do will benefit a student who will become the next healthcare professional, a patient or find the next major medical cure. That’s the kind of difference we have the opportunity to make – it is not necessarily about the pay, the hours or the title. At the end of the day, we do this because we believe we are making a difference in the lives of people in our community.
Q: Now that commitment is being tested in a sector that is in “disruptive transformation,” as you say.
A: Yes, and not only because of the Affordable Healthcare Act, but the general nature of the economy. There is economic impact at the federal, state, and local level. And due to the Affordable Care Act, which has many positive aspects to it, and I think over time will be a good thing, you’ve got two worlds healthcare is attempting to reconcile through right now.
“World One” is transactional. This is the world we have lived all our lives in. You come into a healthcare setting and pay fees for service.
“World Two” is the healthcare that we are now moving into, which is value and outcome-based through population management strategies. It is about wellness and quality of life and not about the fee for service.
The issue those of us in healthcare have today is that “World One” and “World Two” have collided big time. Reimbursement from commercial payers as well as government payers is plummeting and it is driving our margins down. Our cost structure has to dramatically change to where we provide better care at lower cost.
Twenty-five years from now, I believe, people will look back at this time and say, wow, that is when healthcare truly changed.
Q: Between that “World Two” and the economy, how are academic medical centers, in particular, being affected?
A: I will never forget the day in 2008 when the stock market crashed and our economy stalled out. The impact to our endowment was significant, philanthropic giving slowed down and healthcare began a process of re-inventing itself. The new reality of improving the quality of healthcare at a lower cost has been and continues to impact our industry. Healthcare in general is seeing major changes in how patients engage with a medical center. We, like many of our national peer institutions, have seen dramatic drops in in-patient admissions while out-patient activities continue to increase. This has a major impact on revenue for a medical center as the margin created by in-patient admissions drops. Insurance reimbursements by both commercial and government payors continues to drop.
All of these factors, both internal and external, have created the “perfect storm” of disruptive transformation. The overall cost of healthcare must continue reducing. Our medical center has been working through these issues for the last several years. We have targeted our future cost structure to equate closely with the Medicare reimbursement levels. This is no small task for any major academic medical center. All of my colleagues in our medical center have had to deliver more and better services on tighter and reduced budgets. Our development operation has seen a reduction in budget resources of almost 30% in the last several years while launching and supporting a multi-year comprehensive capital campaign.
Q: So how do you and your team deal with that “perfect storm” of chaos and turmoil?
A: I’ve had to lay off 7 people, eliminate other budgeted positions, cut various philanthropic programs and I am in the middle of a campaign. Do I stick my head in the sand? Or do I acknowledge: Ok, healthcare has changed, the way that we deal with delivering healthcare to patients has changed and the way we do business in the development world has changed – now, how do we deal with it?
There is a wonderful quote that John Maxwell said: “The pessimist complains about the wind, the optimist expects it to change, and the leader adjusts the sails.”
What my team has done – and I am proud of these people, really proud – is deal with the new hand we’ve been dealt. The wind is now blowing northeast. How do we respond, how do we think differently and how do we optimize this?
We are in the middle of a re-org of our department that we are excited about because we believe that some great things are going to happen because of these changes.
On the Future of Development:
Q: Any advice you’d like give to aspiring CDO’s from any sector?
A: There is always opportunity and it can be scary and you have to put on your seat belt, you have to have your support network, and you have to be bold and willing to take some risks. We are never going to go back to the environment where things were the way they were. The economy is what it is, business is changing, the way nonprofits operate is changing and there is a level of urgency and intention to just about everything now. A lot will be expected from you — and you need to handle it and figure out how to maintain your sanity through it. Always stay true to your values.
Forget about the traditional way of doing development. There is the art and science of development that will always remain true to fundraising, but the environment today demands a high level of urgency, a high level of intention in every decision and a high level of discipline in what you do and how you execute your strategy. Know that you have to navigate through multiple channels and be the institutional champion for the philanthropic mission. Combine an innovative spirit with extreme focus.
Have the type of relationship where your team knows that you have their back and they have yours. Don’t be a micro-manager. Let your team know you have the authority to make decisions in your area. You are expected to make mistakes. Know the realm from which you can work in and make the decisions you need to make.
The demand for good development people is huge and it is going to stay that way. To be successful, you have to know that it is not always going to be comfortable — and that it is always going to be changing. Change is the name of the game.