Judging from the comments made by the participants of a recent meeting of several very important Houston brokers, it became obvious that whether a broker’s market is experiencing a 20 percent dip or a 40 percent decline, there is much to know and to be learned from how our industry is managing its current situation.
Each month I have the opportunity to talk with brokers across the country who, once the initial bravado had receded, admit that the current market configuration is a bit intimidating and they don’t know where to start. The solution to that dilemma is simple. Start where you can have an impact.
Nowhere can you have a greater impact right now and for a more minimal financial investment than your own organization.
One of the things we know for sure is that when this market transition returns to a sustainable level, there will be observers, scholars and analysts who will study who did what, who didn’t do what, what worked and how it could have been done better. Accordingly it seems to make sense to start that process while the benefits of the lessons to be learned can still be of some benefit to those who are navigating their way through the situation.
For those who believe in learning on the go, there are few books in print today on the subject of company performance under stress that can match Jim Collins’ magnificent 2001 book entitled From Good to Great. Without hesitation, I would earnestly and passionately recommend that every one of you either pull it off your shelf and reread it or visit your local bookstore and have the experience for the first time.
During the late 1990’s and early this decade, Collins, a long time Stanford professor and big league business consultant, employed the services of a research team to identify eleven companies that, during a fifteen-year period demonstrated a sustained record of “great performance.” Greatness was defined as financial performance several times better than the market average of similar companies over a sustained period of time.
An essential element of Collin’s research was that each of the companies examined had survived a “point of transition” within their industry. This point of transition was a bit different for each company depending upon the specifics of their industry, but for each it was a point of reckoning, survival and differentiation.
Collins and his team set out to examine each company’s transition point. The objective was to identify the characteristics that the Good To Great companies discovered, developed or utilized during the transition that their industry counterparts did not?
For the purposes of this discussion and with respect to the American real estate industry, I would respectfully suggest that the current industry challenge represents a classic “point of transition.” RECON Intelligence Services’ research conducted over the past six months powerfully suggests that the real estate industry’s current situation is not about a “down market,” but rather reflects a wide range of market and business practice challenges that must be addressed in order to effect the “transition.”
The Collins research identified three phases within the transition process and suggests that each introduces two key concepts. Taken together, these six factors were found to be the core values of the Good To Great companies.
The book is expertly organized around these factors.
• Level 5 Leadership
• First Who... Then What
• Confront the Brutal Facts
• The Hedgehog Concept
• A Culture of Discipline
• Technology Accelerators
While each of these concepts is relevant to the current real estate situation, I would recommend that firms start with the second. In dealing with the “not what, but who” concepts, Collins and his team really drill down to the issues that are at the root of the real estate industry’s challenge. It was here that the now infamous phrase “get the right people on the bus” emerged. Most of the winning companies discovered that at the onset of the transition many were carrying people who were never going to be part of the solution, who never intended to make the transition.
Enter the concept of the “flywheel.” As the more mechanical reader will know, the flywheel is the device that balances out the sometimes inconsistent output of a small engine. The whole objective of a business organization is to keep the flywheel turning. The power of a turning flywheel in turn provides the necessary energy to perform the functions for which the engine or the company exists.
Three different profiles of organizational players were identified.
• First there are the “flywheel drivers,” those who spend their time doing everything they can to keep the flywheel turning.
• Second there are the “flywheel riders,” those who, while they appear to be contributing, are really faking it.
• Finally there are the “flywheel brakers,” those who spend their energies sabotaging the company’s forward progress.
In the real estate industry there are many amazing flywheel drivers. Unfortunately, there are also a huge number of riders and brakers. These are folks who are either trying to make it through to retirement without changing or those who believe that the industry reached its operational zenith in 1985. Either way, they will not be part of the solution; they are refusing to make transition. Without intervention, they will also keep the company from making the transition.
Start your transition by reading From Good to Great. Not every page is on point for the real estate industry, but most are right on point. As you read, create a list of question about your company. The first two questions might be: can you become a Level 5 leader and who in your company is a flywheel driver, a flywheel rider or a flywheel braker.
Get the right people on your bus. It is worth the ride.
