An overview of steps and tools for the corporate real estate strategy alignment process

Rianne Appel-Meulenbroek (h.a.j.a.appel@tue.nl)

Barry Haynes

Introduction

• CREM practitioners difficulties aligning strategy/activities to corporate strategy

• many different issues to deal with

• tools to make the right decisions

• CREM academics

• Alignment models at strategic level only + difficult (Heywood, 2011)

• Practical tools focused performance mg’t (e.g. Lindholm & Neonen, 2006)

overview steps + tools to achieve + implement aligned strategy

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Strategic thinking and alignment CREM

• Comparisons alignment models • Heywood (2011) 10 models• Ramakers (2008) 8 models

• Heywood 15 components (no complete model)

• Corporate strategy vs CRE strategy• Direct return: reducing costs• Indirect return: increase value • Increasing flexibility• Promoting marketing and sales• Increasing innovation• Increasing employee satisfaction • Increasing productivity

• Strategic thinking: a continuous process

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15 models (mostly 2000’s)

Exchange value

Use value

Strategic thinking and alignment CREM

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Strategic planning

Situational analysis* External analysis* Internal analysis* Directional analysis

Strategy formulation* Directional strategies* Adaptive strategies* Market entry strategies* Competitive strategies

Planning the implementation* Service delivery strategies* Support strategies* Action plans

Strategic momentum

* Managerial action* Strategy evaluation* Emergent learning* Re-initiate strategic thinking

Strategic thinking

* External orientation* Analyze data* Question assumptions* Generate new ideas

Current academic alignment models

Performance measurement

Tools

1.

2.

3.

1. Situational analysis

• Support current + flexibility for future

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Strategic planning

Situational analysis* External analysis* Internal analysis* Directional analysis

Strategy formulation* Directional strategies* Adaptive strategies* Market entry strategies* Competitive strategies

Planning the implementation* Service delivery strategies* Support strategies* Action plans

Strategic momentum

* Managerial action* Strategy evaluation* Emergent learning* Re-initiate strategic thinking

Strategic thinking

* External orientation* Analyze data* Question assumptions* Generate new ideas

Haynes, 2012

Situational analysis:•PESTEL•SWOT•Scenario planning

Situational analysis

• PESTEL: Political, Economic, Social, Technological, Environmental, Legislative

• SWOT: Strengths Weaknesses Opportunities Threats• Scenario planning:

• alternative futures thought through

• strategic options evaluated against these futures

• enhances evaluation + integration of information

• promotes contingency planning

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2. Strategy formulation

• Alignment remains questionable• Differences stakeholders

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Strategic planning

Situational analysis* External analysis* Internal analysis* Directional analysis

Strategy formulation* Directional strategies* Adaptive strategies* Market entry strategies* Competitive strategies

Planning the implementation* Service delivery strategies* Support strategies* Action plans

Strategic momentum

* Managerial action* Strategy evaluation* Emergent learning* Re-initiate strategic thinking

Strategic thinking

* External orientation* Analyze data* Question assumptions* Generate new ideas

Nourse & Roulac, 1993

3. Planning the implementation

• Real estate interventions:• Possible actions (lindholm, 2008)• Relevant CRE aspects (own work)

• Set up CREM department + competitor analysis• Exchange value actions: CREM language• Use value actions very tacit: location + workplace choices

• Cooperate with internal stakeholders to identify explicit goals discuss relevant CRE aspects

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Strategic planning

Situational analysis* External analysis* Internal analysis* Directional analysis

Strategy formulation* Directional strategies* Adaptive strategies* Market entry strategies* Competitive strategies

Planning the implementation* Service delivery strategies* Support strategies* Action plans

Strategic momentum

* Managerial action* Strategy evaluation* Emergent learning* Re-initiate strategic thinking

Strategic thinking

* External orientation* Analyze data* Question assumptions* Generate new ideas

3. Planning the implementation

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Control of environmental characteristics (floor + workplace)

Control of auditive/visual privacy

Control of indoor climate

Emission of/reservoir for harmful substances

Amount of glass in façade (building + floor)

Amount of glass in façade

Building form Representativeness

Aesthetics

Room/workplace layout Individual workplace layout

Floor layout Floor layout

Position of facilities

Accessibility

Building depth/width Building depth/width

Building layout + total amount of square meters

Building layout

3. Planning the implementation

• Setup CREM Department (not one optimal form)• Determines knowledge of primary process +

stakeholders

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 Degree of centralisation

Concentration of activities

Scale/use of outsourcing

Management form

Reducing costs x      Increasing value x x   xIncreasing flexibility x x   xIncreasing productivity x     xPromoting Marketing & sales x      

Frederix (2005)

Separate strategic + operational level

decentralised

centralised

Economies of scale/quality:Competitor analysis

Conclusion and recommendations

• Alignment studies focused on 1 phase strategic thinking map

12 tool-supported steps for CRE practitioners1. PESTEL analysis key drivers affecting your business

2. Converting drivers into key issues

3. SWOT analysis all CRE assets

4. Opportunities + threats for CREM alignment strategy

5. Scenario planning where business is volatile

6. Transform situational analysis into driving forces + prioritise

7. Determine CRE strategie(s)

8. Identify possible actions

9. Discuss relevant CRE aspects

10.Evaluate current CRE portfolio + identify interventions to increase alignment

11.Reconsider current setup CREM department for chosen CRE strategies

12.Perform competitor analysis

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Conclusions and recommendations

• Iterative process• maintain database specific information

• Strategic mindset instead of exact alignment

• Use thinking map early in process

• Further research:• Prioritising actions

• Proving added use value performance measurement of effectiveness

− Short term versus long term performance

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Discussion

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