The Leader - January/February 2008 - (Page 8) messaG e F rom the c eo by prentice knight, iii From site selection to enterprise Geography Location has always been a fundamental concern of corporate real estate (CRE) management. Because real estate varies enormously over the earth’s surface in terms of its internal character (climate, topography, infrastructure, etc.) and access to other places, the location of business activities has a significant influence on business success. Location can be viewed from several layers of geographical resolution – from global regions to specific sites. Business location decisions typically go through a geographical filtering process of first selecting the global region, then country, then state (or local region), then city and finally specific site. Location decisions are not always made this way and sometimes one or more geographical levels are skipped, but this methodology simplifies the location decision and typically produces good results if done well. Given this approach, the selection of a location for a specific facility can be viewed in a five-level hierarchy of decisions: 1. Select the best global region 2. Given the global region, select the best country 3. Given the country, select the best state (or local region) 4. Given the state, select the best city 5. Given the city, select the best specific site What role does CRE play in these decisions? In general, CRE is viewed as a site selector, with greatest responsibility for Level 5. It also plays a significant role in Level 4, and to a lesser extent Level 3. There are a few CRE departments that are major players in Level 1 and 2 decisions, but that is the exception rather than the rule. Here is an opportunity. CRE can and should play a significant role in all levels of location decisions for individual facilities. But the opportunity is much greater than that. The opportunity is for CRE to become the enterprise geographers. By enterprise geography I mean the “where” dimension of the business. All corporations have a geographical dimension but typically have limited understanding of the geography of the enterprise. Where are the firm’s current and potential markets, labor pools and other factors of production? How is the geography of these business factors changing? Where are the company’s current facilities located in relation to the location of business factors? What is the optimum location pattern or configuration of the portfolio of company operations in relation to the geography of markets, factors of production, community relations, risk, etc.? Firms should have a dynamic atlas of the company business, including maps of customers, potential markets, labor pools, factors of production, risk and other factors. Maps of competitors and partners. Maps of employees. Maps at the global scale, regional scale and local scale. The sophistication of mapping systems, commercial databases, geographical information systems and GPS is increasing dramatically while price is dropping, creating an explosion in the availability of geographical data. Most firms are using only a small portion of available geographical data and have poor understanding of how to use the geographical data they do have. The time is right for enterprise geography. But to be effective, enterprise geographers must have a holistic and strategic view of the corporation and the factors that influence the firm’s success. Otherwise, the maps and geographical analyses are mundane and/or only tactical. CRE is the natural home of enterprise geography. Effective management of real estate requires understanding the nature of places, how location influences accessibility, and geographical patterns of business factors. At present, however, CRE is focused mostly on buildings and sites. Buildings and sites must be understood, however, as part of more holistic and strategic geography of the enterprise. It’s time to redefine the horizons of corporate real estate. 2 0 0 8 the le ade r 8 J aN Ua rY / F e B rUa r Y
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