CEO Interview: The leadership journey to build a… | Gagen MacDonald

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CEO Interview: The leadership journey to build a member-centric culture at Lucet

Jun 14, 2023

Shana Hoffman is President and CEO of Lucet, a leading provider of behavioral health solutions and services to commercial health plans, government agencies and other sponsors of care. Formerly known as New Directions Behavioral Health, the company relaunched under its new name and brand in January 2023 after integrating an acquisition and changing its ownership structure. Today, Lucet’s unique combination of people and technology helps more than 15 million members access high-quality providers, while also supporting health plans as they strive to optimize their approach to behavioral healthcare.

Shana, and Lucet, have been working with Gagen MacDonald for nearly three years. At the heart of this case is a highly successful culture transformation that would not have been possible without aligning the three critical dimensions of strategy, structure and culture. Gagen’s “Three Things that Change Everything” framework – Compelling Story, Committed Leaders and Intentional Roadmap – played a key role in delivering on this engagement. We caught up with her at The Conference Board “Change, Transformation & Organizational Design” Conference in New York where she was one of the conference’s keynote speakers.

HB: Shana, always great to see you. Can we start by getting some background on you and your journey to CEO at Lucet?

SH: Absolutely. My career has been spent in healthcare across a mix of large Fortune 500 companies as well as much smaller companies and P/E backed ventures. I also started my own company in the senior care space which was an excellent personal growth opportunity. I then joined New Directions as CEO two and a half years ago as we began the journey which culminated in the launch of Lucet in 2023.

HB: Great context. At the conference earlier today, you spoke about the culture transformation that has occurred at Lucet since you joined. Take me back to the early days when you first joined what was then New Directions. What was the situation then and what were the challenges you needed to tackle?

SH: In simple terms I think the best description is we were seen as a “utility” company. Both by our clients and the customers but also inside the company by our employees and colleagues too. That was partially driven by our 25-year history assisting the Blue Cross and Blue Shield plans we served. That pervasive “utility” attitude meant we weren't focused on financial or operational outcomes. There was no notion of needing to win customers. That perception worryingly extended into our products and services. We weren’t evaluating if our products were relevant to our customers, nor if how we delivered our services, was creating goodwill, repeat customers or any type of loyalty.

A change in majority ownership gave us the opportunity to significantly re-evaluate every aspect of our organization. In short, moving from this “utility” point-of-view to be obsessive about market fit and being market-led. Immediately that meant looking to the market and asking some really basic but profound questions like, “Do our products and services resonate?” and “what health plans do our customers actually need?”

That commercial pivot was critical but inevitably it meant we really needed to rethink everything. From our people, existing processes, our product mix, our technology stack and our technology roadmap. All of it had to come under scrutiny if we were going to make the necessary transformation to being market-led and more operationally and financially driven.

HB: That sounds like a classic “burning platform” moment. That commercial pivot, and all the associated operational changes, must have required an equally significant cultural or attitudinal pivot as well. Can you describe how that unfolded?

SH: 100% it was absolutely critical that we started infusing a new mindset and a new way of thinking about the business at every level. In classic terms this meant new behaviors and new ways of working across the entire organization.

The first thing for us was to loudly and unambiguously state our intention and purpose to become a market facing company. With that intention and purpose energetically shared across the firm, we also understood that there would be colleagues for whom that transition would be too hard or wouldn’t be personally motivating. In fairness, those who had been successful under the previous environment and the previous ways of working would likely find such a significant change incredibly difficult. One of the earliest acknowledgements I had to make (as CEO) was to be okay with that and to act quickly to ensure we had a leadership and workforce truly motivated by what we wanted to become and not stuck in what we had been.

To that end across our senior and executive leadership cohort, 22 out of 27 are new within the past 18 months. That’s significant but, I’m delighted to say, it means that we have a fully committed leadership group who see the remarkable opportunity to create something brand-new here at Lucet. We’re not investing energy in trying to change minds or previous behaviors because everyone has come together to be strongly aligned on what we can accomplish and what we need to be. There remains a healthy – and important – mix of perspectives and opinions on how to drive the business but having that aligned mindset is vital.

HB: Wow. I can certainly see how beginning with a “clean slate” among leadership must have accelerated the transformation. However, 25 years of history and embedded behavioral norms aren’t something that changes overnight. Can you give me an example of how your employees started to embrace this new attitude?

SH: One example absolutely sticks out. A classic example comes from our call center where, previously, our colleagues were measured and rewarded according to classic metrics like call times and, more specifically, they’d been instructed to place customers back in the queue if the call went on too long. Obviously this existing behavior wasn’t in-line with our new customer- and market-orientation, but it did give us a very real leadership moment of reflection. How could we encourage our colleagues to think differently in this situation? How could we look at the surrounding policies, governance and processes to ensure they were rewarded – not penalized – for acting in a manner more consistent with our new orientation.

While that is a small example, it was a great learning moment for me and it deepened my appreciation for how change, particularly large-scale organizational change, really works.

HB: That's interesting, can you tell me more about that?

SH: Certainly. Prior to the experience of the last few years, if you’d asked me about driving change at any scale, I’d have said that it was largely an exercise in communications. Communicate consistently, frequently and at every possible touchpoint and you’d naturally see positive change and momentum. What I gave limited credence to, was all the other invaluable components that augment and enhance the communications part.

I’m talking specifically about elements like the values and behaviors of the organization. The culture piece but, in addition, understanding what inspires a workforce and how to create a truly motivating environment. That means aspects like the belief system operating inside your firm. Those classic micro-moments that happen a thousand times a day like who gets promoted, who gets rewarded, how leaders behave in moments of high stress can have a more profound impact on the speed and trajectory of change. Each of those moments are so fraught with importance because they either remind or reinforce the desired culture or they highlight where there are cultural inconsistencies. Historically I would say I was blissfully unaware of how important those factors – in addition to great communications – were in any transformation. That has been one of the biggest personal learnings of the past few years but one I’m truly grateful I’ve been able to experience.

Lucet CEO, Shana Hoffman at 2023 volunteer event
Lucet CEO, Shana Hoffman with her colleague volunteering at Harvesters-The Community Food Network. June 2023.

HB: Thanks for that additional context, Shana. You've spoken about the need to evolve the leadership tactics you've had to deploy at different times in Lucet's transformation. Specifically, about choosing when to be more directive and when to be a more collaborative leader. Can you explain the difference and why you'd choose one over the other?

SH: When I started in this leadership role, it was clear that we needed to urgently make some profound decisions regarding the company and where we were going. It was equally important that, across the organization, everyone saw those decisions being made purposefully and executed with zero indecision. That decisiveness was critical to show to both employees and the Board of Directors that we were fully committed to acting swiftly to turn the company around. I was very deliberate in two ways – one, I broadly communicated my intent to be decisive and two, I was highly-visible at some of the most critical decisions – like letting executives go – in those early days. We had neither the time, nor the luxury, of engaging in a more collaborative interaction with our colleagues. Swift, direct and unambiguous leadership was required to kick start our transformation.

Ultimately, we needed to be able to communicate to the board, this is how long this part of the plan is going to take. Equally once we did the acquisition being declarative about what we were integrating and why it was so important. Even if all of employees weren't on the same page in terms of their feeling and their energy and excitement about it, at least it was clear what we were doing, and they could understand that and articulate the why of the actions taken.

Obviously that leadership style wasn’t going to remain effective after we got through the initial stages of the transformation. As we started to see the positive outcomes of that initial decisiveness, it became crucial to employ a more facilitative method of leadership so we could begin to build more cohesiveness across the organization. I credit the Gagen team for coaching our leadership team through those various leadership transitions. Knowing when to be directive and when to start becoming more facilitative was a vital part of building confidence amongst the Board, and our employees, that we had a strong plan and were capable of executing it successfully.

HB: It appears that much of the culture transformation at Lucet has been a very real evolution of the leadership team and how leading comes to life at your company. Is that accurate and, on a personal level, what has this leadership journey taught you?

SH: That’s very true. One enormous benefit we have at Lucet is that we’re such a mission-driven organization and the simplicity of that focus really lets you home in on what is critical for our success. It then becomes a case of aligning those success factors with the behaviors and values we need our people to exhibit at every turn. As such, getting to a set of critical values and behaviors – which we launched earlier this year – has allowed us to ground the expectations of our people in some real, tangible examples. Not surprisingly the burden of exemplifying those behaviors falls on the shoulders of our leaders across the firm…obviously starting with me and my ELT. <Laughs>

Today, our people fully realize what are the critical requirements to be seen as a successful and competent leader. And they all know they're going to be actively measured on those leadership requirements too. Today we balance WHAT we achieve with HOW we achieve it which is a profoundly different leadership expectation of our people. Previously we may have focused solely on what outcomes we were holding them accountable for. A crucial factor at Lucet now is how are the people on their team experiencing their leadership and drive? Under that leadership style are they exhausted? Do they understand what their leaders are trying to do – essentially is the leader a context setter and good communicator? This is a level of leadership behavior and richer accountability that wasn’t here previously. I think our people and our teams are better for it.

On a personal level I’ve now got a deeper appreciation of that delicate balance between WHAT outcomes you achieve and HOW those outcomes are achieved. I’ve always been an outcome-oriented leader, and been successful across my numerous roles, but the importance of HOW outcomes are achieved wasn’t always as front-of-mind. When I went through the Equine Leadership Experience with Maril (Maril MacDonald, Gagen MacDonald’s founder and President), I was struck by the growth metaphor of caterpillar to butterfly that sits at the heart of that process and the notion that we all have the capability and capacity to evolve from one state to another. In my previous leadership “state” I hadn’t always given as much importance to the human factors of leadership, particularly the art of aligning a person’s skills or development opportunities to a particular task. As I grew from a successful COO into a CEO, I recognized how crucial that human part was to creating high-potential teams and how I needed to actively slow down my historical leadership approach to pay more attention to the people development part. It’s a real crucial but delicate skill for a CEO to develop and I’m thankful I’m in an environment where I can actively nurture it.

The other leadership lesson that’s been reinforced during this period is one I’m thankful my parents taught me at a very early stage in my career. That is to treat everyone equally, with respect and with dignity. The old adage that people never forget how you made them feel is so true, but the part that’s equally important is that people remember how you made them feel years later as well. You never know when you’re going to need the help of a former colleague so why would you not actively nurture a great relationship with everyone you work with? In my CEO role I’m reminded daily of the importance of a supportive network and how your reputation extends way further than you think. Be kind. Be respectful. Treat others with dignity. Those aren’t just a maxim for leaders, that’s guidance for each and every one of us.

Ultimately this culture transformation at Lucet has given me a newfound appreciation of how important the “HOW” competent is. Particularly as we seek to create an environment that will motivate the mission-focused talent we’ve been fortunate enough to attract. HOW we achieve our outcomes is hugely important in our culture today.

HB: Shana, thank you for your candor and sharing your leadership journey.

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