The Leader - November/December 2008 - (Page 16)

L EVE R AG I N G B U S I N E S S GEOGRA PH Y: A N EN TER PR ISE V ALUE DRI V E N AP P RO ACH are low’… ﬁnally, to add fuel to the ﬁre… ‡ The head of marketing wants to expand customer facing presence in new global markets… but none of the countries HR, IT, and the CFO are focused on are part of Marketing’s target expansion geography. They all want what’s best for the company, and their annual P&L, but they’ve different points of view on how to arrive. It doesn’t have to be like that. Summary Point Two: Silo thinking and reactive decision making often compromise the geographic footprint of the enterprise and regularly miss opportunities to create corporate value. Fundamental Drivers: The Strategic View There is a better way. CRE leaders and other decision makers would beneﬁt from a holistic framework or blueprint to guide corporate real estate, workplace and location decisions based on a uniﬁed set of guiding principles and measures for the geography of the enterprise. Such a blueprint represents more than linear site selection and space utilization perspectives. One such approach is the use of a familiar “Balanced Scorecard” (which is based on the work of Norton and Kaplan as described in a series of articles from 1993 through 1996) framework applied to corporate geography in order to make effective location decisions and create alignment with overall business strategy. While each business will need to tailor the speciﬁc measures and elements of the approach, a blueprint for corporate geography is about optimizing cost and performance based on four factors. 1 Financial Performance: proﬁtability and asset optimization 2 Processes: efﬁcient operations, balancing costs with product /service quality at an acceptable risk level 3 Customers and Markets: brand positioning and products and services; 4 Knowledge: the experience, learning and talent base of the organization, (and often the driver of innovation and differentiation) Let’s explore each of these further and focus on how they relate to corporate geography. Financial Performance: This is the essential bottom line. We have rarely, if ever seen a project where cost, even if downplayed initially, was not a key decision driver. And this is not just initial cost but bottom line shareholder value (please see next section for more detail on shareholder value). Process: Whether services or production oriented, business operations or ‘processes’ need to be efﬁcient, adaptable to change, and aligned to the needs of the marketplace. If knowledge and talent provide the fuel for the enterprise, process represents the mechanics of the business, whether strategic planning or ﬁnancial controls, servicing or production, sourcing or distribution. The geographic environments of these processes are important components of cost and effectiveness. An integrated framework to improve the geographic footprint of companies through alignment of talent strategies, underlying business processes, location requirements, and corporate real estate assets. Customers and Markets: The marketplace for products and services has clear geographic dimensions. The customization of market niches by demographics, culture, needs, and preferences, is directly connected to where these customers are. For customer facing jobs, this most typically means having physical market presence near customers. For distribution, it ties into transportation optimization. How your customers perceive your products or services is often wrapped in their experience in interacting with the company. Knowledge: Sustaining and developing the learning and brain trust are fundamental to continued success as an enterprise. Challenges may be related to retaining the work force or how and where to source future talent. These are some of the biggest challenges facing companies. Talent, skilled labor and a scalable, sustainable work force are central to speciﬁc location decisions and for planning the most effective corporate footprint. Concerns about predicted shortages of talent in the US and Europe have been a big, perhaps the biggest, issue for HR leaders in the past few years but can be fully integrated into the geography of place. For business leaders, this presents multiple challenges on how to continue to develop the knowledge to meet future needs. Workplace, career path, ﬂexibility, place attraction and sourcing of general and specialized employees all come into play. Geography factors into much of this: some combination of talent clusters by industry; multiple language skills; quality of life, education, and pools of low cost labor are usually at the top of most site selection and workplace environment decisions. Given the relatively long term implications and capital intensity associated with most decisions around enterprise geography, it is critical to evaluate the impact on each of the elements of the balanced scorecard in terms of opportunity and risk over time. Summary Point Three: The proactive use of holistic frameworks that rely on metrics tied to corporate strategy can allow CRE executives to assume leadership or coordinating responsibility to establish priorities and protocols for portfolio and workplace decisions, plan for future requirements more effectively and minimize silo thinking across the enterprise. A Flexible Approach to Manage Dynamic Enterprise Geography Using a holistic framework to make discrete 2 0 0 8 THE LE ADE R 16 NOVEMBER / DECEMBER

Table of Contents Feed for the Digital Edition of The Leader - November/December 2008

The Leader - November/December 2008 Leadership Contents Message from the CEO Real Estate in the News Leveraging Business Geography My Work @ Bank of America Blending the Old with the New A Tool for Growth Creating Real Estate Value Nokia-Siemens Networks’ Peter Doran DTZ’s James Maddock Annual Economic Development Directory The Georgia Report Location Profile: Magdeburg, Germany Linking Corporate Real Estate to the Enterprise 3rd Quarter 2008 Adding Value in Challenging Times Australia and New York Shell’s Paul Huston Economic Development in the News A Look Ahead In our Next Issue Calendar of Seminars Index of Advertisers Chapter Learning: The Global Perspective

The Leader - November/December 2008

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