Sunday, June 28, 2009

Downturn? Some Say Opportunity

We are all in the business of making lemonade these days. I am hearing more anecdotal evidence that the beginning of the end of our current economic mess is in sight, but I am not yet a believer. Several of my friends in the design and construction industry point to an uptick in proposals but none of them are yet signing much new business. They interpret the increased RFP activity level as a sign that good things are about to happen. Maybe. Or maybe it’s a sign of people wishing and hoping good things will happen. Who knows? Time will tell, and I hope it tells a happy story.

In the meantime, however, there is still much each of us can be doing, using the urgency created by our current state to make changes to our future state. As CRE’s and FM’s we are responsible for assets that comprise a large portion of the economy. We know for example that real estate is typically the second or third largest cost item, behind talent and sometimes technology, for most companies. It is not uncommon that RE represent 50% of a company’s balance sheet and the operation of those assets can account for 20% of a typical income statement. Big numbers you say? How about this one: Fortune 2000 companies are responsible for over 1 trillion square feet of space. In other words, we design, construct, manage and operate trillions of dollars worth of assets.

To state it another way, we make a very large contribution to the welfare of our respective organizations, and have a responsibility to steward the resources entrusted to us with great wisdom.

So how do we do that, especially in times like these? There are a host of ways, I suspect you will find one or more of these suggestions appropriate for your circumstance.

· Increase portfolio efficiency: In the eighties I spent several years building large corporate campuses and facilities for my employer. Then it all began to crash. We shifted from expansion to contraction and worked hard to redeploy real estate. We analyzed the entire portfolio and consolidated, focusing on strong business units. We got rid of space that was dragging down the balance sheet and were ruthless in doing it. Net result: Fewer sites and greater density, and significant cost reductions.

· Centralize control: When times are tough you need to make better decisions, make them faster, and strive to integrate them across the enterprise. It is certainly possible to do all of that in a decentralized organization, but you will fight fewer battles, make progress and reap benefits much faster by centralizing authority over strategies and implementation tactics.

· Don’t accommodate change, drive it: As noted in an earlier posting here, tough times can also represent opportunity. People are more likely to listen to ideas and more open to large scale change. As those responsible for a large asset base we have a responsibility to do much more than just manage the day-to-day details of operations. We are responsible for envisioning what’s better, what’s next, what’s needed that no one else is thinking or talking about. We are responsible for bringing it to the table, socializing the concepts and promoting positive change that contributes to the well being of our organization. Put your change agent hat on, roll up your sleeves and get to it!

No comments:

Post a Comment