6 the leader | March/April 2013

executive profiles

End User 50Trex Morris, the Quarterback of Ernst & Young’s Workplace of the Future

Service Provider 52René Buck, Providing LocationAdvice across the Globe

Economic Developer 54Barbara Hake, Kansas Department of Commerce

special interest feature

New York: 56Oswego County CombinesPristine Beauty with Robust Industry

departments

Industry Tracker 58An Important CoreNet Global First: Advocating for Quality Work Environments and Experiences

Leadership 4

Letter from the Editor 8

CRE in the News 10

Members on the Move 62

A Look Ahead 63

march /april 2013Volume 12, issue 2

TABLE OF contents

14

SDX - Corenet ad_FINAL2.indd 1 9/23/11 4:52 PM

Special

leaderShip

Section

features

14 cover story Communication Convergence,

Single Data Transfer Sources and Seamless Information Exchange Top the Trends List

20 Doing Business Differently What’s Driving Corporate

Space Needs in Europe?

24 Maintenance Management for FSSI’s High-Performance

Headquarters

28 China and India Play an Increasingly Important Role

in Internal and External Foreign Investment

34 Leading the Corporate Real Estate Enterprise:

Perspectives from Plato, Aristotle and Milton Friedman

40 Winning by a Nose: Five Ways You Can Effect

Exceptional Outcomes

42 It’s Not a Workplace, It’s a Work Place:

Using the Physical Workspace to Attract and Retain Top Talent

46 The Hidden Potential of Tenant Spaces

Energy Performance Optimization in Commercial Office Real Estate

34 the leader | March/April 2013

Leading the CorporateReal Estate Enterprise:

Perspectives from Plato, Aristotleand Milton Friedman

B Y R O B E R T T . O S G O O D , J R .

alignment. In a PowerPoint presentation I use, recent audiences have been particularly interested in discussing tables on three slides. This interest has resulted in extensive debate and suggestions by more than a few colleagues that I write an article on the topic.

The tables on the slides make connections between schools of epistemology (the study of human knowledge and how it’s gained and used), to the way businesses are positioned and operated, to models CRE executives use to align facilities and real estate with the core business. The esoteric title of this paper was derived from these exhibits, in which I use the three schools or paradigms of knowledge practiced by – among others – Plato, Aristotle and Milton Friedman in review-

Aconsiderable portion of my practice and research over the past 30 years has been focused on explor-ing ways that place can be planned and designed to align with and enable the ways people work and

businesses perform. Along the way, I’ve participated on more than 150 projects with Fortune 1000 companies and conducted research with another 400 of these large organizations.

Every year, I share my experiences in a variety of presenta-tions to CoreNet Global audiences, general industry groups and university students. A focus of these sessions is demonstrat-ing the tools and methods that are used by corporate real estate (CRE) executives and consultants to achieve measurable enterprise

SpecialleaderShip

Section

34 THE LEADER I March/April 2013

Aconsiderable portion of my practice and research over the past 30 years has been focused on exploring ways that place can be planned and designed to align with and enable the ways people work and businesses

perform. Along the way, I’ve participated on more than 150 projects with Fortune 1000 companies and conducted research with another 400 of these large organizations.

Every year, I share my experiences in a variety of presentations to CoreNet Global audiences, general industry groups and university students. A focus of these sessions is demonstrating the tools and methods that are used by corporate real estate (CRE) executives and consultants to achieve measurable enterprise alignment.

In a PowerPoint presentation I use, recent audiences have been particularly interested in discussing tables on three slides. This interest has resulted in extensive debate and suggestions by more than a few colleagues that I write an article on the topic.

The tables on the slides make connections between schools of epistemology (the study of human knowledge and how it’s gained and used), to the way businesses are positioned and operated, to models CRE executives use to align facilities and real estate with the core business. The esoteric title of this paper was derived from these exhibits, in which I use the three schools or paradigms of knowledge practiced by – among others – Plato, Aristotle and Milton Friedman in reviewing

different leadership perspectives, philosophies and skills employed by real estate practitioners.

Back to the Beginning: Graduate School The schools of epistemology I will discuss are rationalism, empiricism and instrumentalism. There are other schools of human knowledge, but the three presented herein are the primary examples Professor John Archea first introduced to my classmates and me at Georgia Tech in the early 80s. The program was multidisciplinary in nature – featuring aspects of architecture, business, psychology, sociology and research. The specific class curriculum emphasized an examination of how leading business people and architects used knowledge to drive creativity, innovation, overall business success and related measures of superior performance.

From pages of notes and numerous articles provided by my professor, I’ve summarized the key aspects of the three schools of knowledge in Table 1. Rationalism goes back to the age of Plato and is based on the concept that knowledge is derived from reason, separate from experience (i.e., experimentation). Plato’s most famous student, Aristotle, is often credited with being the first person to define empiricism, which emphasizes gaining knowledge from observation and experience. As Prof. Archea used to explain, advocates of both schools often didn’t recognize the differences between each and used them interchangeably in describing phenomena.

The third school, instrumentalism, was developed centuries after the ancient Greeks and is an offshoot of empiricism that also recognizes aspects of rationalism. Instrumentalism is as much about developing a holistic, pragmatic explanation for predicting and analyzing the totality of events and circumstances as it is about actual outcomes. It’s a common thinking paradigm employed by economists, and as shown in Table 1, John Maynard Keynes and Friedman, who both applied an instrumentalism perspective, could not have been much farther apart in actual economic theory and practice (i.e., same framework, different outcomes).

The Three Schools and Business So, what does all of this philosophy mean for business and the ways CRE executives administer land and buildings? Table 2 depicts my thoughts about how the schools can be applied to the core business.

To be clear, Table 2 is not meant to suggest that business leaders consciously, purposely develop strategies and organize their operations to deliver according to the three schools of knowledge. The reality is

that there are specific short- and long-term, internal and external issues that directly influence how organizations are run on a daily basis.

Short-term examples include current economic conditions, cash flow, politics, mergers and acquisitions, while longer-term factors such as an organization’s overall business model and positioning strategy (cost, quality or service leadership, etc.),

March/April 2013 I THE LEADER 35

innovation focus (do the same thing better than competitors or do something different, etc.), market sector(s) emphasis, regulatory environment, organization structure, values and culture and related concepts come to the fore.

Still, underlying all of those issues is a fundamental way – a certain world view or philosophy – in which individuals and teams of leaders process and use knowledge to lead their businesses.

The fundamental idea is that there are patterns of how companies and leaders with different backgrounds and responsibilities frequently conceptualize their businesses, or parts thereof.

In my experience, the rationalism approach to leadership often resides in human resources and organizational development, with the fundamental idea that empowered and engaged individuals and teams – provided with the right tools – will work together in ways that drive exceptional organizational effectiveness and ultimately, superior business performance. There is empirical evidence to back this viewpoint, but more often than not, leaders of rationalism are perfectly comfortable advocating for a reasoned, intuitive, logical way to facilitate success.

CFOs and COOs are usually at the center of leading companies from an empiricism perspective. They emphasize both cost savings and revenue growth and frequently do so via methods that focus on operational efficiency. Terms like lean, TQM and reengineering are used to improve and quantitatively measure a variety of processes throughout organizations.

The last group, the instrumentalists, is often led by people like the CEO and CSO. Almost by job description, these people often have the broadest view of the business. They rely on data, reason and intuition, using all three as interrelated elements and patterns that form a holistic view of the enterprise.

Gary Hamel, Michael Porter, Robert Kaplan and David Norton are four of the most well-known business gurus of the last 30 years and are shown in Table 2 as external leaders (i.e., consultants/ writers/educators outside of corporations) of instrumentalism. Kaplan and Norton have written two seminal books on the balanced scorecard, a framework for aligning all aspects of a firm’s operation with the overall strategy and vision for the business. By contrast, Hamel and Porter would likely not be pleased to see their names in the same category, as each advocates seemingly different perspectives for facilitating high performance. My review of their work suggests more similarities than differences, with both offering creative ways to envision and frame holistic, instrumentalism-centered business models that use both reason and data.

And Finally, the Connection with CRE A framework for how the three schools can be applied to CRE is depicted in Figure 1. The first thing that must be mentioned about this figure is that the schools have been reorganized along a business and real estate value chain of activities or phases, from

36 THE LEADER I March/April 2013

core business strategy to enabling that strategy via the interrelated elements of people, technology and place (P-T-P) to implementation and ongoing management.

A second related point is to not read the three schools as mutually exclusive but instead as overlapping in how and when each is applied, and the characteristics and activities attributed to each are essential at different points in time. And similar to the business examples, the suggestion is not that CRE executives consciously apply the epistemology models verbatim (they don’t), but that there are elements of each that are consistently used from one assignment to the next.

Equally important is that many of the most successful, innovative CRE executives I’ve served use an instrumentalism mindset to guide their work. Their mission is upstream alignment with the core business, and they view place as part of an integrated, multidisciplinary P-T-P

tool kit (partnering with HR, IT, business unit heads and other corporate leaders). They’re able to show that real estate strategy can be measured in the context of organizational outcomes, rather than in just separate real estate metrics. Likewise, for these types of practitioners benchmarking is about asking the types of questions and producing concepts about organization-specific business processes and new ways of thinking to drive superior performance rather than a standard recitation of generic real estate statistics that look backward at what’s been done and for which almost everybody has access.

The result is that CRE executives who think like instrumentalists not only report to the C-suite but often are able to get senior leaders to participate in key place projects. Participation is important because research conducted by my colleagues and me shows a strong correlation between the most successful projects and well-defined change management programs that include the active engagement of senior leadership (as opposed to only periodically reporting to these people).

Again, Figure 1 can be viewed as depicting separate, yet interrelated schools of knowledge applied to CRE and as phases along the value chain. The point in both cases is that without some sort of overarching instrumentalism framework, the rationalism and empiricism perspectives focus on issues and activities that – though very important – often start further downstream and are not directly connected to the core business. The elements associated with rationalism and empiricism are made more purposeful and impactful by a well-considered application of instrumentalism as the alignment mechanism with the C-suite. Empiricism can be used to generate key statistics and evidence, rationalism offers a rationale for understanding the data and forming key arguments, and instrumentalism provides the context for bringing everything together as a complete story.

Ultimately, the relevance of Figure 1 is not so much about the names of the three schools of knowledge but the elements attributed to each. My hope is that several resonate with the experiences of at least a few people reading this article, who almost certainly use different titles to describe the elements. In writing the piece, I’ve tried to be mindful of the literature produced by and presentations made at CoreNet Global conferences over the last decade. Irrespective of titles used, much of that work has emphasized the perspective of CRE executives transitioning from transactional and individual services models to one that’s more about multidisciplinary business and strategy leadership.

For me, the three schools of knowledge afford an opportunity to apply broad ideas learned many years ago in a way that hopefully adds value to individual CRE executives responsible for aligning real estate with core business strategy. I’m sure that’s what Plato, Aristotle and Friedman had in mind, too.

March/April 2013 I THE LEADER 37

Robert Osgood, Principal at Flad, assists organizationsthroughout North America with a variety of research,strategy and change management consulting capabilities.He is a frequent lecturer and has been publishednumerous times in professional journals. He can bereached at rosgood@flad.com.