Final report June 2012

CRE&FM FUTURES FORUM

Disruptive thinking

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2 DISRUPTIVE THINKING: CRE&FM FUTURES FORUM

Edited by Dr. Barry Varcoe

Written by Dr. John Hinks, Dr. Barry Varcoe and the Zurich CRE&FM team

Zurich Insurance Group Ltd.Corporate Real Estate & Facilities Management

AcknowledgementsMany people too numerous to mention were involved in making the Futures Forum a unique experience and success. However there were certain significant contributions that it would be remiss not to specifically acknowledge with gratitude:

• TheZurichInsuranceGroupCRE&FMteam,inparticularthosewhohelpedmoderate the Forum discussions.

• RichardTrafford,ZurichCRE&FMHeadofStrategyandDevelopment,whomastermindedtheForumfromthebeginning.

• DaveClute,ZurichCRE&FMHeadofWorkplaceTechnology,andtheAtizoteamforprovidingtheForumwebsiteplatform.

• Dr.JohnHinks,ZurichCRE&FMHeadofInnovation,whodraftedmostofthewords in this report.

• AlloftheForumcontributorswhosignedupandparticipatedsoenthusiastically.

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CONTENTS 3

Contents ........................................................................................................... 3

Acknowledgements ......................................................................................... 2

Introduction ..................................................................................................... 4

Please note …................................................................................................... 4

Insummary ...................................................................................................... 5

01 Business relevance ............................................................................. 10

02 The nature of work and the workplace of the future .............. 13

03 Customer service ................................................................................ 18

04 Sustainability ...................................................................................... 21

05 Integrated solutions .......................................................................... 22

06 Partnerships ......................................................................................... 25

07 Sourcing process ................................................................................. 28

08 Value-based pricing ........................................................................... 32

09 Knowledge management ................................................................. 34

10 Market differentiation ...................................................................... 36

11 Service quality ..................................................................................... 39

12 Intelligent client ................................................................................. 42

13 Innovation ............................................................................................ 45

14 Attracting talent ................................................................................. 49

15 Risk ......................................................................................................... 51

16 Globalisation ....................................................................................... 53

Reflectionsonthemespresent,themesabsentandfundamentalquestions ........... 56

Contents

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4 INTRODUCTION

InJanuary2012ZurichInsuranceGroupinvitedasmanypeopleacrosstheglobalCorporateRealEstateandFacilitiesManagement(CRE&FM)industryaswecouldreachtoparticipateinaCRE&FMFuturesForum;aunique,week-longonlineeventthat we organised.

Introduction

Please note…This document is a synthesis of the contributions of the participants of the CRE&FM Futures Forum.

It should not be considered to necessarily reflect Zurich Insurance Group Ltd’s opinions or views.

TheForumprovidedaneutralandopenvenueforindustryrepresentativesfromaroundtheworldtodebate and share ideas on sixteen key topics that we hopedwouldbenefiteveryoneinvolved.Thepurposeofthiswastotrytorapidlyadvanceeveryparticipant’sunderstandingaroundsomeoftheindustry’skeychallenges–issuesthathadforthemostpartlongbeen recognised and discussed and/or complained about,butfromourperspectivehadseenverylittle or no significant advance in practice.

TheFuturesForumwasheldbetween30Januaryand3 February. Participation was open to anyone interested.Intheeventover450peoplesignedupfromallaroundtheworld,andtheycontributednearly700uniqueideas,andmanymorecommentsaswell.Wealsoheldtwotelephoneconferencediscussionseachdaythatfocussedontheindividualtopicsinturn.Theonlydisappointingaspectwasthecomparativelysmallproportionof‘end-users’whoparticipated,despiteanextensiveinvitationlisttothissectoroftheindustry.Thiswasbalanced,however,bytheverypositiveresponseinparticularfromthesmallernicheconsultantsandsuppliers,whosevoiceisperhapslessoftenheardattheestablishedindustryvenues.

Attheendoftheeventwepromisedtocompileacomprehensivereportoftheknowledgecaptured,andtodistributeitwidelywithintheindustry.Thisiswhatyou are now reading.

Thereportisstructuredaroundthesixteentopicsthatwere debated. Firstly there is a chapter that summarises thekeypointsfromeach.Thisisthenfollowedbyaseparatechapterforeachtopic,whichsetsouttheoriginalquestionandcontextstatementfollowedbyasynthesisofthedebate.Finallywereflectonthemespresent,themesabsent,andresultingquestions.

Wetrustthatyouenjoyandbenefitfromreadingthisreport,andhopethatitservestoestablishaplatform ofcollectiveunderstandinguponwhichwecanallbuildthefurtherknowledgeandadvanceinpracticethat,inourview,theCRE&FMindustryverymuchneeds.

Dr. Barry Varcoe

GlobalHeadofCRE&FM,ZurichInsuranceGroupLtd. June 2012.

Please email me at barry.varcoe@uk.zurich.com with any comments or observations.

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IN SUMMARy 5

01 Business relevance• CRE&FMcurrentlyhasnoobjectivewayofevidencingthevaluethatitbrings

to business.

• ThisisafundamentalblockertoCRE&FMbeingseenbythebusinessasanassetrather than as a cost.

• BeforecommencingcollationofthenecessaryevidencethereisaneedforafreshunderstandingoftheCRE&FMvaluepropositiontotheenterprise.

• AresultingnaturalevolutionforCRE&FMmaybeforitbecomepartofareformedwider‘businessservices’function.

• EvidenceofCRE&FM’simpactonworkforceproductivitycouldbekey.

02 The nature of work and the workplace of the future• Theworkplacewillcontinueatransitiontobeingasocialhubthatisthephysical

manifestationofdesiredculturalandbrandvalues,aswellasaplaceofproduction.

• The‘office’willbe(isalready?)oneofanumberofplaceswhereworkroutinely gets done.

• Economyofflexibilitywillsucceedeconomyofscaleasaprimaryvaluefocusforglobalisedbusinessplatforms.

• Theworkerandtheirneeds(effectiveness)arenowtheprimaryCRE&FMfocus, nottheworkplace(efficiency).

• CRE&FMwillneedtobetterunderstandwhatreleasesproductivityfordifferentpeopleworkingondifferenttasksindifferentcontexts.

03 Customer service• CRE&FMiscurrentlypositionedbetweentheunendingdemandsofbusiness

units and the continuous pressure to contain and reduce costs… a natural cause ofdissatisfaction.

• CRE&FMcurrentlypaysinsufficientattentiontotheevidenceofhowcustomervalueis created or lost.

• Ashiftfromaprimaryfocusonbuilding-centricinputstocustomer-centric outcomesmayrequirearedesignoftheentireCRE&FMeco-system,andcertainly its delivery models.

• Tomorrow’sCRE&FMteamswillhavetosense,mediateandmonitorforandwithclients,customersandconsumers–andunderstanddeeplythemeaningfuldistinctions between each and their expectations.

• GreatconsumerandcustomerexperienceswilldifferentiateCRE&FMinthefuture byappealingtoboththeheartandmindofconsumerswhilstprovidingatangibledifferencetothebusiness.

In summary

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6 IN SUMMARy

04 Sustainability• Thereareseveral‘levers’availabletoCRE&FMtoreducecarbonintensity,

butallrequireabaseofreliabledataandperformancetargets.

• Fivethemesemergeasbeingimportant:behaviourchange,standards, buildingandenvironmentalperformancemanagement,knowledgesharing, and supplier management.

05 Integrated solutions• So-called‘integratedsolutions’todatehavetendedtosupportexistingoperational

andindustryfragmentationratherthancatalyseprofoundlynewwaysofoperating.

• Trueintegrationwillbebasedaroundpartnerships,coordinatedprocessesand data technology.

• Businessbenefitsmustdrivethenatureofintegration,andnottheotherwayaround(asiscurrentlypursued).

• Understandinganddefiningintegratedproblemswillhelpthedevelopmentofintegrated solutions.

06 Partnerships• TherearemultipletensionsinherentinthewayprocurementandCRE&FMoperates

today that makes partnering a challenge.

• Truepartnershipswillbedrivenbyacommonvisionfortherelationship,mutuallycompatiblegoals,transparency,trust,andtimeandeffortfromallparties.

• Mutuallearninganddevelopment–workingtogethertodobetter–willbekey.

• Ultimatelypartnershipsstandorfallontheattitudeofthepeopleinvolvedand their approach.

07 Sourcing process• Thetraditional,lengthy,sourcingprocessisarguablycausingaviciouscircleof

commodityservices,dissatisfiedcustomersandlowmargins.

• Forcommoditisedtask-basedservicese-sourcinglookscertaintocontinueasanefficientandeffectiveapproach.

• Formorecomplexoutcome-focusedservicesanewapproachisneeded.Thiswilllikelyembracedifferentsupplierselectioncriteriaandlonger-termmanagementapproaches.Atitsheartwillbeamuchmorecollaborativeengagementbothbeforeandafterthecontractissigned.

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IN SUMMARy 7

08 Value-based pricing• Afundamentalchangeisneededtothecurrentpricingmodels,whichforrealestate

brokerage in particular seem to have lost touch with value.

• Inthefuturefeeswillbemorecloselyalignedtothevaluetheydriveforthecustomer’sbusiness.Thiswillrequireappropriatemeasurementtoolstoevidencerelative success in this regard.

• Newareasofvaluewillemerge,suchastimelinessandflexibility.Intangiblevaluethat cannot be easily measured will need articulating in other ways.

09 Knowledge management• Thereisacultureintoomanyorganisationsthathavingknowledgeishavingpower.

Realisingthebenefitsofknowledgemanagement(KM)requiresafundamentalchangeinmindsetformanyawayfromthis.

• KMneedstoaddressbothexplicitandtacitdata/information.

• TheentireKMprocessshouldbedesignedaroundbusinessneeds.

• PrioritycomponentsofaneffectiveKMapproachincludedatacollection,categorisation,storage,retrieval,analysis,re-application,anddisposal.

• AtrulyeffectiveKMsystemhaspotentiallymassivebenefitsforall CRE&FMstakeholders.

10 Market differentiation• Acombinationofcurrentprocurementprocessesandservicelevelagreements(with

theirinbuiltmetrics)isseentobecausingcommoditisation,alackofdifferentiation,andacycleofdecline.

• Serviceprovidersfeelthattheyhavemoremarket-readyinnovativesolutionsthancustomersarepreparedtobuy,soareabletodifferentiateonlyifallowed.

• Benefitsfromdifferentiationenjoyedbyclientorganisationscouldincludeimprovedproductivity(directandviaassetutilisation),recruitmentandretention,satisfaction,and brand enhancement.

• Attainingthisdifferentiationandtheirbenefitswillrequirenewbusinessmodelsandmethodsofoperation.Thisinturnwillonlyhappenifallstakeholderscommittoinvesting in it both financially and personally.

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8 IN SUMMARy

11 Service quality• Servicequalityexpectationsmaydifferbystakeholder.ForexampletheCRE&FM

clientwillbemoreinterestedinoverallvalueformoneywhereasendconsumers,withnocostreference,expectquality.

• CRE&FMcanlearnfromadjacentindustriessuchaslogisticswheretheindustrialisationofcoreservicecomponentsandaclearfocusonunderstandingcustomerneedsleadstogreaterefficiencyandperformancecertainty.

• Acontinuousimprovementculture,supportedbyeffectiveperformancemeasurementframeworks,willbeimportantfornotonlydrivingbetterservicequality,butalsoinevidencingit.

• Aswithallserviceindustriesthequalityandattitudeofthepeopleemployedintheservice delivery will be a critical issue.

12 Intelligent client• The‘intelligentclient’conceptisconsideredtohavemostpotentialtobeeffective

inatruepartnershiparrangementwithsuppliers(anarrangementconcludedtobeelusiveforthemostpart)backedupbyanexcellentgovernanceregimethatensuressmart decision making at the right levels by the right people.

• Theroleofthe‘intelligentclient’istoassembleandcatalysemulti-facetedandcross-border/cross-organisationalnetworks,combiningtheirstrengthsandattaininga synergy around business alignment.

• Keyskillsetsincludestrategicplanning,changemanagementandadaptability. Thiswillneedtobeinfusedwithdeepbusinessunderstandingandaconfidentdisposition so that necessary business challenge will be communicated when necessary.

• Evidenceofhighperforming‘intelligentclients’willincludeeffectiveforwardplanning,theextensiveuseofanalytics,appropriateorganisationalmodels, and close internal customer relationships.

13 Innovation• InnovationhasbecomeafundamentalimperativeforCRE&FM.Thepressureto

innovateisrisingasitbecomesclearerthattheindustryandthebasicCRE&FMvaluepropositionarebothatriskofflat-lining.

• Anumberofforceshavemitigatedagainstinnovationinthepast,includingprescriptiverequestsforproposals,input-basedSLAs,introspectivemeasures,constantcostpressures,andahistoryofunder-investmentandveryweakR&D.

• CRE&FMasanindustryneedstorespond.Thisshouldincludearadicalchangeofmindset(ablendofboldness,toleranceandpatienceatthesametime),acultureofopenness,reflectionandquestioning,afocusonhowpracticallytocatalyseandencourageinnovation,andthedevelopmentofinnovationtoolsandprocesses.

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IN SUMMARy 9

14 Attracting talent• ToohighaproportionoftheCRE&FMindustry’stalentintakeprobablyoccursby

‘happyaccident’.Itcertainlyisn’thighonthelistofcareerpossibilitiesofhigh-flyingstudents and executives.

• Partoftheproblemisthenarrow‘gene-pool’thatistypicallyconsidered–thosewithCRE&FMskillsandexperiencebythosewithCRE&FMskillsandexperience.Thereisaneedtolookmorewidelyacrossdifferentindustriesfortalent.

• Wealsoneedtogetbetteratdevelopingthosewehave,especiallyingeneralbusinessleadership skills.

• Theindustryshouldtargetpotentialsourcesoftalentfarearlier,includingatschool-leaverandundergraduatelevel.Thisneedstobealignedtoclearandappropriateeducation.Thiswillrequirearethinkofhowtheindustryismadecompellingandattractive–‘millennial’talentwillthinkandexpecttoworkinadifferentwaytothecurrent‘babyboomer’leaderstryingtorecruitthem.

15 Risk• ItiscrucialforCRE&FMtofullyunderstandthebusinessappetiteandcapacityforrisk

in order to be able to design and manage the service resilience accordingly.

• Riskisbroaderandmustgobeyondbuildingoperationriskandbusinesscontinuity.

16 Globalization• GlobalisationhasundoubtedlybeenoneofthekeydriversofchangeintheCRE&FM

industry over the last two decades... but has it merely served to provide the same fragmentedservicesonamuchlargerscale?

• Asympatheticbalancebetweenglobalideasandstandardsandlocalconditionsandparticularitiesisessentialtoavoidefficiency-of-deliverygainsattheexpenseofthecustomer experience.

• Globalisationbenefits,especiallytheenhancedexchangeofskillsandpractices,shouldbepossiblethroughboth‘singlesupplier/globalclient’and‘multiplesuppliers/localclients’approaches.

• GlobalisationandstandardisationofeverycomponentoftheCRE&FMmodelisnotthoughttobedesirable.Operationsshouldbealignedtowhereeachofthekeyvaluedriversoriginate–local,country,region,orglobal.

• ItisquestionablewhetherCRE&FMleadershipcollectivelyhastheculturalskillsetandexperiencetoachievesustainedcompetitivedifferentiationthroughglobalisation.

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10 01 BUSINESS RElEVANCE

The context:Westruggletodemonstratethevalueweaddtotheenterprise(wedon’thavemuchinthewayofevidence)and are only seen to be important when a big deal is beingconsideredorwhensomecrisisoccurs.Wearealso good at talking amongst ourselves but not to those whomatterinawaythattheyunderstand.Asaresultweare,arguably,steadilyfallingdownthe‘corporaterelevance’leaguetable–wearenowsignificantlybehindbothHumanResourcesandTechnology,andmoreoftenthannotbehindProcurementaswell. Whatcanwedotochangethis?Howcanwere-alignourselves to the enterprise so that we have a relevance andvaluetheywillseekoutandseriouslyconsider?

The response:TheCRE&FMprofessioncurrentlyhasnoobjective wayofevidencingthevaluethatitbringstobusiness,specifically how our activities improve business performance.Thisisafundamentalblockertomovingtheperspectiveofthebusinessbeyondusbeingan oft-quotedsecond-highestcosttotheenterprisethat

01 Business relevance By John Hinks, with Barry Varcoe and Heather Sommerville

providesoperationalsupport.Advancingtoabusinessperspective based around contributing to value and managing a strategic and competitiveness lever still lookstobeabitofastretch.Meanwhile:

• ThiscreatesaglassceilingfortheCRE&FMsector–as one contributor observed late on in the discussions,whilstthere’smuchtalkontalkingthelanguageofbusinessandunderstandingitsneedsandwants(notalwaysthesamething),CRE&FMhastheabilitytounderstandandinfluenceoutputsthroughspaceprovision,butcommunicatesandsellsmainlycostandefficiencyissues.ThisisnotthereasontheCRE&FMfunctionexists.

• Itisalsosub-optimalforbusiness–thedefaultperspective that business typically takes is that real estateisanexpensemarginforcompanies,andthatasageneralnatureCRE&FMdoesnotgenerateincome(despiteitbeingabusinesstooltoallow the people and equipment operating within the workspacetocreatevalueforthecompany).Indeed,whilstmostbusinessexecutivesknowwhatHRandICTdoasbusinessfunctions,becauseCRE&FMcoversaverybroadbaseithasamoredifficultmessagetoget across.

The question:WhatdoestheCRE&FMindustryneedtodotosignificantlyimproveitsrelevancetotheenterpriseitexiststosupport?

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01 BUSINESS RElEVANCE 11

However,this‘missedCRE&FMvalue-addopportunity’perspectivewasnotuniversallyacceptedintheforum: “theconceptofvalue-addismisplacedbecausewearemore or less a cost centre with occasional opportunities to bringinrevenue(forexample,anadvantageouspropertydisposition).ButHRandITarecostcentrestoo,sowhyaretheymorerelevant?ThegoalforCRE&FMistobeviewedasakeyenablertosuccesslikeHR,IT,Logistics…otherwise,thebestwecandoisbreakeven;thatis,havingtherightspace at the right time and cost”.

Concerningchanging/raisingthestatusofthebusinessrelevanceofCRE&FM,themajorityoftheforumcommentsendorsedfocusingonproductivityaswell asonrevenueandcostcontrol.Thisisanissueforthewholeindustry–boththeclient-sideandsupplier-side.Whilsttheclientnowunderstandsthatcostsavingandeconomiesofscaleareavailable,itistimetoalsodemonstratethatexpertise,complianceandemployeesatisfactionareaspectsofservicevaluetooandthatshort-termcostsavingsmightcomeathighercostinawider sense later.

The future – changes in perspective

We have been talking about this for a long time.Onecontributor’sviewwasthatweshouldmakecleartotheleadershipthatweasaprofession,asasector,should play the global economic governance game the waytherestoftheworldplaysit;“Thismeansthatonanationalleveltherearelegal,culture,market-structureandlanguageissuesthatinfluencethewaypeoplelookat this problem and the direction they want to take it. On a continental level it is the same. On a global level again.WeneedtobeattheWorldEconomicForumandspeakaboutthiswithonevoice,becausewerepresentalotofpeople.Togetherwecandoalotfortheeconomyand the planet.”

Weneedtobetterunderstandbeforewecanevidence…understandthedifferencebetweenwhatwedothatavoidsvalueloss(suchascoordinatingservices,aligningservicestofitbusinessneeds),andwhatwedothatcreates,oradds,value(forinstance,anintegrationalperspectivethatdeliversanend-to-endformofservicefromthecustomer/consumerviewpoint).Asonecontributor argued – “do you know how your respective organisationsmakeaprofit?Whatdoesitsvaluechainlooklike,andwheredoesCRE&FMfitin?”Wethenneedtoderiveor,better,adoptgenerallyaccepted

conventions to express/evidence the added value that we bring in terms that the business understands – be that financial,productivity,uptime,cost/benefitratios,orsomeothercombinationincludingbusiness-relevantindices.Therewereseveralsuggestionsforapproachingthis:

• CRE&FMshouldutilisecompanymandates/values/goalsand develop evaluation criteria around these so that theyenjoymutualenforcementandaccountability.

• CRE&FM’srelevancyisdirectlytiedtowhatthecustomerbelievesisvaluable.Determinewhatthecustomer finds valuable and make it the primary and collectivefocusofthesupportservicesyouprovide.

• Measureslikeemployeeretention,creating‘bestplacestowork’metrics,andreducingcostsofservicedeliveryinthecorebusinesswillhelpthejourneytowardsmorevisible,andmorevalued,positions.

• Understandthebusiness,engageandbuildmeaningfulrelationshipsacrosstheorganisation,completelyconnect the workplace to the business strategy and its people,createanexperience,measurewhatmatters,integratekeypartners,leveragetechnology,learn,share and seek to innovate.

• CRE&FMhastounderstandthebusinessand financialcontextoftheclientitisseekingtoserve.Understandingthefinancialbottomlineandhowtopositivelyinfluenceitisimperative.

• AglobalforumfortheexchangeofideasneedstooccurwiththecorporateleadersofCRE&FM,IT,HR,andProcurement.Thiswouldinvolveadevelopmentofgoals/visionandincludeacriticalexecutivecomponent(forinput/direction/decision).

• Andthiscontribution,whichwasveryinteresting: “InanorganisationIworkedinpreviouslyweweremovingtowardsexpressingthecost,impactandvalueofCRE&FMinitiativesbytheirimpactonEarningsPerShareandCostPerAccount.Thatwasidentical with the way all initiatives across the companyweremeasuredanditwasfeltitwouldputevaluatingCRE&FMinitiativesonthesamefootingasITinitiatives,MarketingandSalesinitiatives,NewProductdevelopmentinitiatives,etc...ThethinkingwasitwouldpositionCRE&FMinitiativesascorporateenhancers(kindofanasset)ratherthanjustprojects(kindofanoverhead).”

Ofcoursewethenneedtodeliveraccordingtothismodel,engagingwiththeotherkeypartnerssuchthattheevidenceoftheoutcomesissetwithinabusiness-relevantcontext.ThemoreeffectiveCRE&FMserviceorganisations are already educating their clients this way.

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12 01 BUSINESS RElEVANCE

Starting afreshAstheroleofDirectorofBusinessServicesemerges(encompassingCRE&FM,HR,ITandevenpossiblyFinance)thiscouldpreparethegroundforastep-changeinperspectiveonthenature(andevaluation)ofbusinesssupport.Asonecontributorputit,“weneedtoexplorenew paradigms rather than continue to beat our heads againstthebrickwall!Thisisnotaboutintegratingthethreeexistingfunctionsbutmoreaboutblowingupallthreeandstartingafresh”.Wecanworkwiththebroaderbusinessservicemodelandre-conceptualiseCRE&FMaspartofasupportsystemwhichisevidentlyalreadybeingappliedbybusinesses.Thiswillrequireastrongrapportwithothercomponentelementsofbusinessservices.ItwasarguedthatcorporationsthathavesuccessfullyraisedthecriticalprofileofCRE&FMhavedonesobyconsolidatingCRE&FMfunctions acrosstheportfolio:

• outsourcewell-definedoperationalareas

• implementingtechnologytooperate,manageandreportonCREfunctions

• andintegratingCREreportingintobusiness financialperformance.

Othercontributionsresonatedwiththis,arguingthatfortoolongwehavedebatedamongstourselves,reviewedourselves and pondered on why we are not valued by thetoptable.Asonecontributorobservedlateoninthediscussions,CRE&FMisinwardlookinginperspective;toitsdetrimentitisoverlyfragmentedandpoorlydefined;andCRE&FMfolkfailtograsptherapidlychangingnatureofthebusinessenvironment.

SeveralcontributorsadvocatedaprofoundneedforarethinkwithinCRE&FMonourvalueproposition:

• Whyareweimportanttotheorganisation?

• Whatisourvalue?

• Whatelsecanwedotoincreaseourvalueto theorganisation?

• Wespeakourownlanguage,usemetricsrelevanttousaloneandaretotallyinwardfocused…isthatwhywefinditsodifficulttodefinethetrueroleofCRE&FM?

Forsomeafreshstartcouldn’tcomequicklyenough,and the emphasis should be on our contribution to productivity:

• “InthefutureweneedtohavemorethanjustcollaborationbetweenCRE&FM,IT,HRandFinance–weneedthefocusputontotacklingtheproductiveuseofspaceandpeople.Weneedatboardexeclevelaresponsibilityforthesechallengesinarapidlychangingworkenvironment.Apropermarriageofforward-lookingbusinessprocessanalysis,performancemanagement and workplace service provision.”

• “Thecoreissueisnolongeraboutbuildingsorservices but about enabling productivity that delivers competitiveadvantagesforyourorganisation.”

• “Thekeyissueisthatwecontinuetotakecareofthe‘box’ratherthantrulytrytoalignwiththebusinessobjectives...whichweoftendon’treallytrytounderstand.TheITpeopleofTescousedtheelectronicteamstodevelopCRMtools.TheHRpeopleatDisneyknowtheirroleinthesuccessoftheparks.NotoftendowerecogniseCRE&FMpeople’sdrivingroleinenablingacultureofinnovationthroughworkspacestrategyoruseofdemographicinformationtosegmenttheoffer.”

Applyingthiswastouchedonbythiscontribution: “ITleadersareaheadoftheirCRE&FMcounterparts.EnlightenedITmanagersareprioritisinginvestments into areas that provide a clear return to the business units,ratherthanjustprovidingaubiquitousservice toalldepartments.Byfocusingonthevaluechainand ROI,thoseITdepartmentheadsarehelpinggeneraterevenue,notjustmanagingoverhead.WhynotapplythesameapproachtoCRE&FM?Relevanceisrelated toprofit,andprofitstemsfromrevenue,not justexpenses.”

CRE&FM needs to better understand what we do that creates, or adds, value

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02 THE NATURE OF WORK AND THE WORKPlACE OF THE FUTURE 13

The context:Thenatureofworkischangingatanunprecedentedpace.Rapidtechnologicaladvancesinthedigitalworkplace,changesinthebehaviourandexpectationsofdifferentgenerationsandsocieties,theincreasedconnectednessandnetworksoftheworld,dramaticshiftsinwealthandthedepletionofnaturalresourcesarejustsomeoftheforcesthatarecausingpotentialupheavalinthenatureofwork. Yet when it comes to the physical workplace we still seem to be buying basically the same tables and chairs we havebeenforthepast30to40yearsandmore.Ifwehadnolegacyissuestoworryaboutandthereforeacleansheetuponwhichtodesign,whatwouldtheofficeworkplaceof2017andbeyondlookandfeellike?Howwillitbeused?Howshoulditbedifferentfromwhatwedonow?What’work’willbedoneinit?

The response:Therewasastrongemphasisthroughoutthistopicon thechallengeofcreating‘greatplacestowork’,sothediscussionsreturnedquitefrequentlytotheroleoftheofficeasasocialhubandasareflectorforthebrandandspiritofanorganisation.MuchofthediscussionconsideredthechallengesfortheCRE&FMindustryinhandlingthegrowingdynamicdisconnectbetweenphysicalspaces,technology,workstylesandpeople’sexpectations.

02 The nature of work and the workplace of the futureByJohn Hinks, with Nicola Blundell and Rosa Navarro

The workplace of the future – changes in perspectiveTherewereanumberofproposalsabouthowfutureworkwoulddifferfromnow,allofwhichwerebased onknowledge-working/knowledge-sharingformsofbusiness operation:

• Workwillbeanexperienceincreasinglyorganisedaroundco-creativeteamsfocusedoncollaboration.Despitetheteamsandtheworkbecomingincreasinglyvirtualandmobile,‘theoffice’willremaintheprimaryplaceforknowledgeworkerstodevelopandmaintaincollaborativerelationships,andwillthereforealsoservethebusinessinpromotingculture,brand,andexpectedbehaviours.However,suchofficeswillincreasinglybeusedformeetingsratherthanasacollectionofworkspacesforindividuals.

• Somebusinesseswilldecidethattheynolongerwanttheirworkerstocomeinto‘theoffice’.Aninterestingexampleofapplyingthiswasquoted:“MicrosoftcompletelymovedoutoftheHQ(400headcount)offeringnootherplacebuthometoworkforthreemonthswhilethebuildingwastransformed,theaimbeingtoraiseawarenessoftheessenceofspacebytakingitallaway.Theanalysisindicatedthatwhilstproductivitywasresilient,thelossofthesocialfactor(asabove)wasmissed.”

The question:Whatwill‘work’belikeandwhatwillthe(unconstrained)officeofthefuturelookandfeellikeby2017?

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14 02 THE NATURE OF WORK AND THE WORKPlACE OF THE FUTURE

• Thehistoricalviewofsuccessasdefinedbypayandstatuswillbereplacedbyfreedomandchoiceforemployeestoworkwhen,where,andhowtheyaremosteffectiveinachievingoutcomes.Theriseoftheorganisation that never sleeps is already giving more examplesofthismodel.

• Lookingacrossglobalbusinessplatforms,economy ofscalewillbesucceededbyeconomyofflexibility–mobileworkingingeneralwillsolveanumberofconcernsforbusinessesoftodayandtomorrow,offeringloweroperationalcosts,lowerrealestatecosts,lowercarbonemissions,lowerwaste,lessstrainoncityinfrastructure(andassociatedtaxburdens),plus,perhapsmostsignificantly,astep-changeinflexibility.Astheworkplacebecomesanincreasinglyvariableconcept(andcost)ratherthan afixedoverhead,sothelocationofhubswillbeincreasinglydrivenbythedynamicsaffectingtheemergenceoftalentandclientmarkets.Twenty-four-hourbusinessoperations,overlainwiththepressuresandopportunitiesofchangingcostarbitrage,thelocalevolutionoftechnologycapacity,andvariousaspectsofresiliencewillincreasinglydrivedispersalsandrealignmentsofthebusinessoperations.

• Itwasassertedthattheleadingknowledge-basedbusinesses will be the ones that provide autonomy andtheenablingtoolsforworkerstodecidewhen,how and where their work is accomplished collectivelyandindividually,onandoffcompanypremises.Theirworkplaceofferingsoverallwillbe acompetitiveaspectoftalentattraction,andwillfeatureprominentlyastheconceptofanintegratedbusinesssupportfunctionemerges,basedoncombiningIT,HRandCRE&FMservices.Suchcompanies will increasingly attract and retain the best talent,plusthecombinationofthemoreeffectiveuseoflessspacewillimprovetheircost/incomeratioandproductivity.FortheCRE&FMindustrythiswillbereflectedinprogressivereductionsandreconfigurationsoftheworkspace,plusnewprofilesofintegratedsupport services.

• Home-workingwillenhancetherelevanceof smallermanagementhubsforfacilitatingepisodicmeetingsbetweenotherwisemobileworkers.Asthese digital nomads become the prevalent model fortheleadingedgeofglobalbusinesses(especiallywherethisconfersquickerandcheaperentryto,orexitfrom,newmarkets),somaythecommonplaceofficeformsofworkplacedesigntodayreducedownto either production/processing hubs and interaction/business centres.

• Itwasproposedthatanothertensionwillplayoutaroundthetotalcostofsupportingtheseformsofadministrative/backofficeprocesses(particularlythosethatarestillpaper-dependenttoday).Thetrendforoffshoringbasedoncheaperlike-for-likeprocesses(largelyvialabourcostarbitrage)willbeincreasinglychallengedbymigratingback-officeprocessestoITsystemsandprocessingviadigitallyroutedautomaticservices.Forotheraspectsofbusinessactivitywhichhaveinherentpotentialformoreflexiblewaysofworking,anyinertiaintheworkspaceofferingswillbecomeanincreasingthreatto competitiveness and the necessary business agility. Thelaggardsstandtobewrong-footed.

• Itwasfeltthatinthenear-to-mediumtermtheresidualformofrealestatewillbeback-to-basics,where buildings still add value by accommodating peopleirrespectiveoftheirpersonaluseoftechnologyinfrastructure.Itwasproposedthatthiswill(continueto)bedrivenbyarangeofnascenttechnology innovations including cloud computing (especiallySoftwareasaService);anexplosionofportable/mobilecomputingdevicesfromtabletstoultranotebookswitha‘buyyourown’approach;ubiquitoushigh-speedwirelesswith4G/WiGig;ubiquitousdesktopvideo;andthegradualdeath ofpaperas‘digitalflow’takesover.

Itwasgenerallyagreedthatorganisationswillcontinueto vary in their approaches to space and business activity accordingtotheprofileoftheirbusinessactivities.Hence,ratherthanthelegacyapproachtospacebasedonroleorfunction,businesseswillincreasinglyconsolidateworkplaceconceptsaroundactivities-basedand/orcompetencies-basedworkmodels.Thetwomodelsmayco-existindifferentpartsofabusiness,according to the corporate workstyle and/or divisional sub-cultures.

Thesevarioussketcheswillbereflectedaccordingto the relationships between people and the workplace. Awell-conceivedandwell-deliveredactivity-basedworkingsolutionlooksmostlikelyforthosebusinesses

The future of the workplace will be about providing a variety of diverse places and spaces

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02 THE NATURE OF WORK AND THE WORKPlACE OF THE FUTURE 15

(orpartsofbusinesses)operatingmassivelyintegratedandrelativelystableprocesses.Thisapproachwillafforddifferingworkstylesbyprovidingdifferingphysicalspacetoundertakedifferingtaskswithintheoverallprocess.Suchworkplaceswillthereforecontinuetoreflectthecharacteristicsofthewaypeople,groupsandorganisationswork(orareconceivedasworking)inanorganisation–wherethecorrespondenceisgood,thenefficiencyofuseandproductivityofworkwillbemaximised.Asworkisconstantlychangingasacompetitivedifferentiator,managingthiscorrespondencewillinvolvemanagingadynamicequilibrium,notsimplymanaginganewstablestate.ThisposessubtlebutprofoundchallengesfortheCRE&FMoperation:

• Thepersonandtheirneedsarenowabsolutelycentric,ratherthantheworkplace.

• Therelationshipbetweenthepersonandtheworkplaceinallitsforms(physicalandvirtual)isdynamic and evolving – an adaptive system where thequalityoffitoftheworkplaceisanemergentresult,notsimplyadriver.

Thequestionofwhetherthebusinesshas,ineffect,brokenitsmooringsinrespectofthefixedofficewasnotexplicitlyvoiced,butwasimplicitinanumber ofthreads.

Analternativeapproachtowork–acompetencies-basedmodel – will involve a much more adaptive paradigm forworkplacedesignandoperation.Thisdistinctionbetweencompetencies-basedandactivities-based workmodelsclarifiesfurtherwhenconsideringhow tosupporttheworkingpreferencesofdifferentgenerations.Thisismostnotablewhencreatingworkplace and service packages which incorporate formal/informalmeetingspacesforusebydifferent ormultiplegenerations.Gettingthisrightiscrucialforknowledge-sharingorganisations(especiallywheretheknowledgesharingandco-creativeworkinginvolvesseveralgenerations);itisalsopivotaltogettingtheoptimalcost-benefitbalanceforacomplexorganisation.

Changingworkplacedemographicsmeanthatuptofourdifferentgenerationsmaybeworkingside-by-sideinacontemporaryglobalbusinessoperationandforsometimetocomestill.AstheleadershippassestoGenerationX,thismayhavesomeprofoundchanges forattitudestotheworkplace.Alongsidegenerationaldifferencesinworkstylewealsoneedtoreflecttheimpactsofculturaldifferencesandexpectationsworldwide.Thiswillbeausefultensionforthinkingaboutwhatisanappropriatelevelofstandardisation.

The workplace of the future – dynamicsTheconsistentviewofthecontributorswasthat,inpractice,theofficewillincreasinglybesystematicallyfactored-inaspartofawiderspectrumoftechnology-enabledworking–includinghome,semi-publicenvironmentssuchashotels,businesscentres,libraries,coffeeshops(the‘thirdspaces’),plusclientlocations, allcombinedwithon-the-moveworkingviaBlackberryortabletorlaptop.Thiscouldrunrightthroughtothe‘officeinabackpack’endofthespectrum,especiallyforemergingmarketswherethereislittleornolegacyofoffice-centricityinemergingbusinesses.

Theblendofwaysofworkingwillprobablybedynamic,skewed by the activity and then overlain by the competency/preferencesoftheworker–whichmayalsoreflectculturalandgenerationalidiosyncrasies,andwillcertainlyoffertheCRE&FMindustrythechanceofagamechangerrole.Muchofthischangeishappeninginformallyorinanunstructured,un-optimisedmanneralready,sothekeystepistoformaliseitintoanintegrated support model which allows the business to becomestrategicabouthowitre-formatsitsworkplace.

TheneteffectinCRE&FMtermswillbetomassivelydecreasetheformalallocationofspace-per-person(accompaniedbyare-profilingofassociatedservices)andtoincreasethesignificanceofcommunications/networkscapacityandresilience.Butthestep-changewillcomefromnewprofilesofuse.Realestatewillhaveto be utilised ever harder to serve both people and organisationaloutcomes,andtorestrictwhatcouldotherwise become an increasing burden on overall financialperformance(andsustainability).Severalcommentators pursued this and went on to question whethertheworkplaceofthefuturewillbeofsecondary importance to the virtual space provided. Forknowledge-basedcompaniesthisseemstobeareasonablequestion,sinceseveralbusinesssectorshavealreadysufferedasdisruptiveinnovationsinbusinessmodels have stolen a march on businesses with extensivefixedportfolios–onlineretailingbeingoneexample.However,itseemsmorelikelythattheblendwill alter according to circumstances.

Aspectrumofviewswereofferedonhowthistechnology and workplace relationship dynamic might operateinthenearfuture,andimpactexistingpractise:

• Asmobilenetworks/wi-fibecomefasterandmoresecure and more widespread there may be no need for‘theoffice’asweknowittoday.Since50%of

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16 02 THE NATURE OF WORK AND THE WORKPlACE OF THE FUTURE

onlineaccessalreadyoccursonnon-desktopinterfaces,willthecontinueduptakeofhigh-poweredsmartphones,tabletsandothermobiledevicesmeanthedeathofthedesktop?

• Anotherviewwasthatwillthesefuturedevelopments in ubiquitous technology see employees owning more advanced and smarter technologythantheiremployers?Ifso,willBYO(bringyourown)smarttechnologypervade?Forward-thinkingcompanieswillembracethistrend,allowing people to choose their own technology and equipment.Thiswillbeanattractivescenarioforpotential employees and will help attract the brightestandthebesttalent,butitmayalsoposemultiplesecurity/accessandresilienceimplications,plusablurringofthebusinessboundary.However,thiscouldworkwellforproject-basedco-operatives.

• Itwasarguedthattheconceptofefficiency appliedtoworkplacewouldtranslateintoportfolioconsolidation,higherutilisation,smallerfootprints,andspacestandardisation.Increasedcompetitionandshorterlifecycles(business-changeandworkplace-change)wouldrequireCRE&FMtorefocusonefficiencythroughagility,whichwouldmeancombinationsofsmallerandmorelocations,cross-functionalanddiversespaces,andback-uptechnology.Metricstoevaluateandprioritiseforthiswillneedtobetterreflectinterdependencyinorder to properly illuminate the potentially complex and emergent benefits.

The journeyIfwebelievethatthefutureofworkwillbeeven moremobile,moreglobalandsupportedbynewtechnologies,thenthefutureoftheworkplacewillprobably not be about one specific place but rather avarietyofdiverseplacesandspaces.We–business,corporate real estate team and supplier alike – will increasingly make our choice based upon a basket offactorsaroundourwork,ourworkprocess,and ourpersonalpreferences.Thebusinessesthatcanaccommodatethiswillgetfirstchoiceofthebestavailable talent.

ThekeyquestionthenishowwilltheCRE&FMindustryevolvetomanagenewconceptsofhigh-performanceworkplaces when people and activities are not based in buildings?Howwillwecontributetothemaintenanceofconnectivityandcultureacrossthebusiness?Someideaswere proposed:

• Technology:Ubiquitousaccesstotheorganisation’sinformationwillbekeytobusinessesbeingabletooperateintheofficeoftomorrow.Muchofthisisinplacealready–examplesincludingcloudcomputing,Dropbox,mobileemailandtheinternet.Theemphasisisnowmovingfromdeskprovisiontoarangeofcollaborationandmeetingspaces.Mobileworking is here to stay but should not exclude or overlookregularteammeetingsandotherwaysofconnectingwithcolleagues.It’salltooeasyforstafftobecomedistantanddisengagediftheyarenotinregular contact with the enterprise and its culture. For businesses concerned about the security/ technologytension,CRE&FMorganisationsstill have some time.

• Culture:Creatingcontemporary,state-of-the-artspaces will not be enough – the main hurdles arenotjustchangingtechnology,butchanging howwe(thebusinessandtheCRE&FMindustry) relate to place and space and to each other. Dealingwithstandardisationanddealingwith deeply embedded cultural behaviours need to be thought through together.

• Fortheworkplaceandtechnology(orphysicalanddigitalworkplace)tosynergiseratherthanconflict,businesses will have to push through several key changesinattitudes.Somehavealreadyshownthiscan be used as a cultural change driver.

• Thepracticeofline-of-sightmanagementwill be dropped.

• Thedecouplingofofficeentitlement/sizefromfunctionality–perhapsthiswillbeadvancedbytheideathatflexibleworkingindicatesanearnedlicenceandenclosedspacesareonlyrequiredforsensitivecalls/videoconferencing.Inthisworld,theability toworkflexiblywilldenoteachievementinthemeritocracyandtraditionalsymbolsofsuccesswill be superseded.

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02 THE NATURE OF WORK AND THE WORKPlACE OF THE FUTURE 17

• Theviewthatthemanagementofabusinessprocessoperatesindependentlyoftheworkspaceitoccursinwillwither.ThiswillbematchedbyacorrespondingchangeinFMsothatitoperatesthroughthespace,mediating with business leaders to help them make thetransitionandgetthebestoutofthenewworking configuration.

– Severalcontributorscitedthe1995exampleofInterpolis(partofRabobank),includingdifferentsettingswithlockersforpersonaleffects;cleandeskpolicy;andpeopleonlyallowedintheofficeamaximumofthreedaysaweek.Whenthecapacityofthebuildingwasreachedusingthisapproach,afloorwasclearedandacompetitionwasrunbetweensevendesigner-createdzonesdedicatedtomeeting,eatingandinteraction. Afterbenchmarking,thelaggardlocationshad amake-over.

– AlsocitedwasthecasestudyofhowLillyremedied‘lostproductivity,highercapitalexpenses,andinaccessiblemanagerswithaninterestinginteriorspacedesign.Theyquantifiedtheaboveshowingtheimprovementsbeforeandaftertherenovation.See‘High-PerformanceOfficeSpace’intheSeptember2011editionoftheHarvardBusinessReviewbyA.LaingandD.Craig.

• Promptedbythis,onecontributorobservedthatagilityis“astateofmind:areadinesstothinkandcreatenewformsandadapttochange”.Yettheworkplaceisamajorfacilitator/inhibitortothis,especiallywherestandardisationtosuitCRE&FMefficiencyisallowedtotrumptheactivity,sector,orgeographicalrequirementsfordiversityinworkplaceconcepts.Changeisneededheretoo.

• Whilstmobilityofworkliberatesusfromfixedlocations,weallstillneedasenseofbelongingtoateam.Thiscanbemanifestedinmanyways–sharedvisionandobjectives,sharedculture,places(physicalandvirtual)fordiscourse,groupidentityandpersonalisation.Designformobileworkersneedstoaccommodate with areas specific to socialisation and collaboration;tech-enabledcafes,“un-walledquietnooks”,largeopenmeetingareaswithcomfortable,flexibleseating;perchingareasandaudio-visualsuitesand physical activity suites/areas with mobile device connectivity built in.

The role of the workplace and the CRE&FM industryWewillneedtobetterunderstandwhatmakesproductivitytickfordifferentpeople(generationallyandworkstylepreferences)workingondifferenttasksandindifferentcontexts.Thisiscomplex.Itisimportantthattheworkplaceofthefutureisn’tdevelopedstrictlytohousethemaximumnumberofoccupantsbutisinsteadfocusedongeneratingthefullspectrumofmeaningswithinefficiency,effectiveness,creativity,andproductivity.

Overall,thediversityofviewsexpressedbycontributorssuggeststhattheworkplacesofthefuturewillmostlikelybemanythings–networked,branded,flexible,integratingsocialmedia,etc.However,gettingthemrightwillneedtobebasedoncarefulanalysisofbusinessandprocess-basedneedsandcorporategoals,andasmartbalancingofthesepurposestotheiruse bypeopleenjoyingasuiteoftechnologies.Thereforeworkplacesofthefuturewillbesuccessfulonlyifmanaged dynamically.

TherealestatefunctionhastostartworkinginpartnershipwithMarketing,ICTandHR,andenter intodialogueabouttheseissues.Ittakesusoutside ourcomfortzonebutthatistheonlywaytoevolve.

Economy of scale will be succeeded by economy of flexibility

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18 03 CUSTOMER SERVICE

03 Customer service By John Hinks, with Ray lopinksi and linda Hendricks

The question:WhatdoestheCRE&FMindustryneedtodo,andhowdoesitneedtochange, toconsistentlyprovideagreatexperienceforallconsumers?

The context:Inalotofserviceindustriescompetitivedifferentiationandsuccessisincreasinglybecomingfocusedonproviding a lasting positive impression through great customerexperiences(howthecustomerfeelsaboutwhattheyreceiveisaprimaryconsiderationfortheproviderandamajorfeatureoftheservice).Achievingthisrequiresaservicethatrisesfarabovethe‘hum-drum’normandiscontinuallyenhancedwithnewideasand components that exceed expectations and delight theconsumer.AndbearinmindthatinsomewaysCRE&FMserviceshaveanadditionalchallengeinthatmostofour‘customers’arereallyjust‘consumers’–they do not have a choice over what to purchase and havetomakedowithwhattheyaregiven,perhapscreatingahigherlevelofscepticismfromtheoutsetthanisnormal?

The response:Thedominantmodelcurrentlyisoneoftherationing ofaccesstoabusinessinfrastructureneed,centredontacticalservicedelivery,sometimesbasedonpurecost-containment models managed by real estate personnel centredonthebuilding.CRE&FMusuallystandsbetweenbusiness units wanting space and services and the competingobjectiveofthewiderenterprisetocontaincosts–surelyanaturaloriginofcustomerdissatisfaction…

Theprevalentknowledgebaseforcustomersatisfactionderivesfromproductindustries(KanoModelsandthelike)eventhoughwetypicallydefineCRE&FMasaservice industry. Hence our metrics still tend toward inputsandprocesscontrolratherthanoutcomes.Asthe‘gatekeepersofspace’,weasaprofessionneedto‘ownup’toourresponsibilitiesasthe‘definersofexperience’and take seriously the impact our approach has on people – both customers and employees.

Weoftensubstitutefunctionalexpertiseforbusinessjudgment…thisrelianceonspecialisedknowledgetendsThe perspective should

shift from the physical asset to business support

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03 CUSTOMER SERVICE 19

toward a fixed and bounded outcome rather than a dialogueaboutservice.ColumbiaUniversityresearchhasdemonstratedthatcustomerfocusisthesinglemostimportantdifferentiatorbetweenthebestandworstorganisations…Meanwhile,CRE&FMpaysinsufficientattentiontotheevidenceofhowcustomervalueiscreated or lost.

The future – changes in perspectiveTheperspectiveshouldshiftfromthephysicalassettobusinesssupport,withCRE&FMbeingmanagedanddeliveredasaservice.Thiswillinvolveasignificantshiftbytheprofessionandbybusiness:

From TotheTayloristnotions includeeffectiveness ofefficiency ofbusinessoperation

cost-minimisation servingbusiness and maximising processes space utilisation

containersforpeople catalysingbusiness and processes productivity

Asignificantportionofthecustomer-facingdeliverysystems may need to be redesigned. Or perhaps the entireCRE&FMecosystem–notjustthedeliverysystems.Andifwhatyoumeasureiswhatyoumanage(cost,volumes,time…)ourmeasurementswillneedtochangetoemphasisedifferentthings.

The journeyTheintersectionbetweenaneffectiveemployeeexperienceandaneffective(external)customerexperienceremainstobemade,andisaprerequisite toCRE&FMmakingtheconnectionbetweenitsserviceandenterpriserequirements.Sinceallcustomerserviceinteractionsareexperiential,andthereforesubjective,wehadbetterlearntoworkwiththis.Greatservicestarts and ends with understanding your consumer. Youcannotprovideagreatexperienceifyoudonotunderstandwhatthatmeansfortheconsumer.Thealternative,commonlyafailureofpersonality,isthebiggesthurdleandcreatesthegreatestdamage.Thequalityofengagementiscriticaltorelationshipsateverylevel–positive,pleasant,proactive,andprofessional.

And what will tomorrow look and feel like?Officeenvironmentswillincreasinglybepartofaspectrumofservices,ahigherproportionofwhichwillbehappeningoutsideoftheoffice.Thisaspectofthefutureisalreadyhere–eitherweembraceitasanopportunity to evolve our service model or watch it becomeour‘burningplatform’.Thefeel,lookandcultureoftheworkplacewillthereforebeamorecrucialfactorinthefutureasofficeusagebecomesincreasinglydiscretionaryforthebusinessandfortheirstaff.Tomorrow’s(today’s?)wirelesswayofworkingplacesthe onus on our places and services to catalyse the memorable,positive,emotionalconnectionsbetweenpeopleandbetweenpeopleandplace.Ineffectivespacesandserviceswillgraduallywither.Thisjourneycanbeapowerfulprocessinitself,andCRE&FMcansharetheleadingroleininfluencingandservingbusinessanditspeople.Greatexperienceswilldifferentiatetomorrow’sCRE&FMbyappealingto both the heart and mind whilst providing a tangible differencetothebusiness.

So, what will have changed?• Ourappreciationofhowworkplacesandservicesboth

reflectandinfluenceourattitudesandbehaviours.

• Arethinkaboutwhoseservicesweareproviding–theexecutivewhofocusesonthefinancialbottomlineandtechnologytoachievethis,ortheirteammembers?

• Wemayhavemovedpriorityandresponsibilitydownthelinetotherealcustomer,sotheyexperiencewhattheyselect,consciouslybalancingcostsandrisksintheir choices.

• Forhigh-touchservices,likecateringandtransportation,theenduserswillberecognisedaspartofthesetup,andtheirfeedbackwillhelpfinetuneandevolve the service.

• Motivatedemployeesmaycreatesatisfiedcustomers.Thekeytosuccesshereisdefiningwhoallofourcustomersare.ThesetransformationswillstartwhenCRE&FMreprioritisetheiroutputs.

Thekeyliesinanewapproachtothecompetingcontextsofcorporation,CRE&FMdepartments, businessunitclient,andtheconsumerswhoexperienceservices directly.

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20 03 CUSTOMER SERVICE

yes, yes, but how do we bridge the gap?Ifwereallywanttore-centreCRE&FMaroundthequalityofcustomerexperience,doesitmakesensetoretainthesamedeliverymodel?Anexperienceisrememberedifrealattentionhasbeengiven.Realattention means being prepared to pause and ask customers what they really need and want – that means realcontact,andrealcommunicativefeedback.Notjustdeliveringfacilities,spaceandservices.Itmeansmakingtheleaptothinkinglikeacustomer.Therearegreatexamplesofwherethecustomerisalreadyaco-innovatorinotherservicemodels–involvedinthedesign,theconstructiveevaluationofthedelivery,andthere-designofservices:

Amazon• Redefinedcustomerexperienceandcustomer

involvement – a gamechanger.

• Anticipatesneeds,makesiteasytorealisethem,backsuptheirpromiseswhenthingsdon’tworkout.

• Clearandexplicitservicesincludingreliabledeliverywithflexibility.

• Updatesandat-a-glanceorderstatus,backedupbyflawlessinvoicing.

• Easydispute-resolutionprocess.

• Agoodinternalmodelformanagingtheco-operationswithsuppliersandtransport.

• Benefitsofpurchasingpowerarepassedon.

• Insomerespects,similartoCRE&FMmanpowerinthattheyare‘only’adealerorenabler,bringingtogether supply and demand.

Disney• Pioneeredtheconceptofexceedingpeople’s

expectations,andstillthemodelmanycompaniesaspire to.

Apple• Innovationanddesign:“You’vegottostartwiththe

customer experience and work back toward the product–nottheotherwayaround.”(SteveJobs)

Zappos • Greatcustomerserviceandorderfulfilment.

Product returns are simple.

Whole Foods • Companyprideandgreatcustomerservice‘oozes’

fromeachpersonwearingthecompanycolours... no matter what position they hold.

BMW, Virgin Group, Nordstrom • Focus,striving(givinganddemandingboth)foryears;

longbeforetheyledtheirrespectivebusinesscategories.

Customer experience and tomorrow’s CRE&FM functionTomorrow’sCRE&FMteamswillsense,mediate, andmonitorforandwiththecustomer.Meaningfuldistinctionsbetweenclient,customerandconsumerwillshapethedesignanddeliveryandevaluationofservices.

Some final rhetorical questions

Could this role emerge as a completely different service function?

Will CRE&FM as we know it today exist in 3-5 years?

Could leveraging the partnership with HR and ICT help the step-change?

Will tomorrow’s great customer experience be a journey or a goal? Or both?

Great experiences will differentiate by appealing to both the heart and mind

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04 SUSTAINABIlITy 21

04 SustainabilityByJohn Hinks, with Anja Fischer

The question:Whatshouldwebedoingtogetherandindividuallytomeetourmoralobligationacrossallsustainabilityissues?

The context:Commercialrealestateisreportedtoberesponsibleforapproximately20%oftheplanet’scarbonemissions.Yetas an industry we say very little about what we are going todotoreducethatburden.Oneoftheproblemsmaybethelackofacommonunderstandingastowhat‘sustainability’actuallyembraces–isitjustcarbondioxideemissions,allnoxiousoutputs,wastetreatment,naturalresourcedepletion,and/ormorebesides?WhatistheveryminimumthatallCRE&FMteamsshouldbedoingnowinthisregard?Whatshouldthemoreadventurousbetryingtodo?Whatwillsoonbepossibleforeveryone?Andhowcanweworkmoreeffectivelytogether?

The response:Businessesunderstandthelonger-termrisksofclimatechange,butunderstandingisnotthesameasacting.

SeveralpotentialleversweresuggestedforCRE&FMexecutives to use to reduce carbon intensity in their real estateportfolio:

• Reducingthecarbonintensityofenergysourcesthroughtheuseofrenewableenergy,cogenerationorotherlow-carbonsources.

• Reducingtheenergyintensityoftheirportfoliobyincreasingenergyefficiencyandconservation.

• Increasingthespacedensityoftheirportfoliobyoptimising space design and accommodating new waysofworking.

• Changingbehavioursofbothbuildingoperators (FM)andusers.

InsupportoftheseCRE&FM(andtheirsuppliers) shouldbemanagingenvironmentaldata,settingperformancetargetsandsettingupaprocesstoestablish sustainability opportunities.

FivekeythemesemergedthatCRE&FMorganisationscanleadtostep-changethesustainabilityperformancesoftheiroperations:

• Behaviourchangewasfrequentlyreferenced andhighlightedasanareatofocusontoachievepotentially significant environmental and cost savings.Evensmallchangesinbehaviourarebelievedtohaveamajorimpactonthebottomline.Embeddingbehaviourchangewillrequireacross-disciplinary,cross-functionalapproach,strongtop-down sponsorship and work to define sustainability withinthecontextofacorporateidentity.

• Standardisingsustainability,whichreferstopermanentlyimplementingsustainability-relatedguidelines,strategies,andprinciplesthroughoutaCRE&FMfunction.Itwillbeimportanttooutlinemorechallenging targets and public commitments which are supported by transparent reporting mechanisms.

• Managing/monitoringbuildingperformanceandenvironmentaldatawouldcreateanopportunityforCRE&FMprofessionalstoimplementbestpracticeandtomakethemostofaglobalportfolio.Thiswouldprovidevaluablebaselinesforstandards andimprovement,andsupportbehaviour-changeinitiatives.Althoughmonitoring/automationsystemscanbeimplementedtovaryingdegreesandcosts,benefitscouldbeattainedevenfromalimitednumberofautomatedbuildings.

• Aggregatingandsharingindustryknowledgeisabsolutelyvitaltorealisethefulllearningpotentialin an organisation – including conveying knowledge fromthelocallevelacrossthebusiness.

• Sustainablesuppliersandmanaginginnovativerelationships in this regard should be a priority agendaitem.Thegoalofclientorganisationsshouldbetomovebeyondsimplyverifyingthattheirsuppliersaresustainable,todevelopinginnovativepartnerships throughout the supply chain to embed andrethinksustainability.Todoso,anorganisationneedstobothdefineminimumstandardsfortheirsuppliers and work with them in partnership to embed a continuous improvement culture.

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22 05 INTEGRATED SOlUTIONS

05 Integrated solutions ByJohn Hinks, with Peter Geu and Vince Candela

The question:HowcantheCRE&FMindustrygobeyonditscurrentfragmentednatureto deliver truly integrated solutions with a value that is more than the sumofitsparts?

The context:TheCRE&FMindustryismadeupofalargenumberoffragmentedcomponents.Itis,ineffect,anamalgamofmanydifferentindustries,eachofwhichismassiveinscale(e.g.propertyinvestment/ownership,development,design,construction,maintenance,cleaning,security,foodservices,logistics).Therearesomegenuinelyglobalsuppliers,butthevastmajorityarelocal,regional,ornational.Inaddition,thereareanumberofdifferentandseparateprofessionsinvolved(architecture,surveying,engineering,accountancy,etc.).Evenatahighleveltherearethreekey,andoftenseparate,streamsofworkthatareembraced–asset/transactionmanagement,construction/design/projectmanagementandfacilitiesmanagement.Asaresult,mostso-called‘integrated’solutionsareactuallyattemptsatachievingbettercoordinationacrosstheseparatecomponentsoftheservicechain,andbetweentheservicechainandtheinternalCRE&FMteam;withtheaimofreducingthelosses that occur between the various components. Trueintegrationwouldaddressend-to-endprocessesand solutions that add value through improved service qualityandefficiency.

The response:Separatingthevariousbusinessservicesbydistinguishingbetweenclient,consumer,andcustomer,andhandlingthemthroughsub-industriescontrollingdifferentprocessesissoold-fashioned.Sotechnical.Sofinancial.Multiplepartiesandorthodoxiesarejointlyandseverally

culpableforthisdisaggregation:theprofessionalinstitutions,theCRE&FMclient-baseandthebusiness.Willintegratedsolutionshavetoemergeinspiteofratherthanbecauseoforthroughthem?

• Lackofintegrationbetweenthepartiesresults fromlimitedvisibilityandunderstandingofthe roles,responsibilitiesandactivitiesofeachparty.Contemporaryapproachestointegratedsolutions havenotreallyaddressedtheseissues;inshorttheyhave been more management and technology push thanprocesspull.Thewaysinwhichsuchintegratedsolutions have been imagined and operated to date have tended to support the existing orthodoxies ratherthancatalyseprofoundlynewwaysofoperating.Thishasdonelittletoadvancethetrueintegrationofthedivisions(CRE,FM&Projects,forexample).

• Tocompoundthis,mostserviceproviderorganisationsandoperatingplatformsarenotintegrated and their technology tends to be a data warehousereportingportalsatoverthetopofdisaggregatedfunctionalsilos.

• Thecurrentsetupofcorporationsaroundthe world probably mirrors this and is also holding back true integration.

Sowhatisatstake?Considerthis–whydidn’tSony (whoownedthemobilemusicindustryforyears,nottomentionthemusic,thedevices,etc.)inventtheiPodorsomethinglikeit,whereasAppledid?WhenPeterSheahanputthisquestiontoaSonyexecutivetheanswerwas,basically,‘westoppedtalkingtoeachother’.

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05 INTEGRATED SOlUTIONS 23

The future – advances in integrated solutionsThosewhomoveonwillstopcaringaboutthesilosandwillshifttheirfocustotheeffectivenessoftheintegratedcustomerexperienceandalsotheassociatedchangefromcontent-controltocontext-effectiveness.Sincearguablyno-onecandeliverallaspectsofCRE&FMalone,trulyintegrated solutions will be grounded in collaborations to fulfilthefullvaluechainpotential.Sincethetechnologiesarebroadlyinplace,anygamechangerwillderivefromoverthrowing the process and relationship management orthodoxies.Noprovidercan‘crediblyclaim’tobethebestatallthingsinallplaces.Sincetheycan,however,bethebestinprocess,metrics,strategy,andalignmentwithacorporation’sownfinancialandoperationalstrategies,thebetterintegratorswillapplytheprinciplesofsynergy,andwillassemblethebestofthebest,allowingthemtoplay to their strengths.

Themechanismsforachievingthiswillbebasedaroundpartnerships,coordinatedprocessesanddatatechnology:

• Partnerships:Thecurrentviewthatserviceintegrationwithoutsourcingrequiresallfunctions to be routed through a single provider will have droppedaway.ThiscouldbedonebytheCRE&FMactingas‘intelligentclient’,andwillinvolvemultiplesupplier partners operating in a network.

• Coordinated processes:Acommonstandardsapproach(lookatISO9001foranexample)mayofferamechanismwhichcouldcrossorganisationalboundaries and support a globally dispersed asynchronousprocessplatformworkinganywherewherethepartieshavesufficientcapabilitymaturity.

• Data technology:Acommonorcompatiblesuiteoftechnologicalplatforms,supportedbystandardisedoperating/data-sharingprotocolswillsupportthecoordinatedprocessesandpartnerships(currently it seems to be leading and hence applying new technologytooldways).

Exemplarsofappliedintegratedsolutionswilldemonstratehowsharedvision,sharedvaluesandsharedgoalsallowthem to operate seamlessly as collaborative networks. Thosewhoreally‘integrate’toapointwheretheyprovidesolutionsthataremorethanasumoftheirpartswillhavelefttheoldfragmentedwaysbehind.

ThisfuturemodelcouldseetheintegrationofHR,ICTandCRE&FM.Plus,anewanddistinctprofessionalrole

ofIntegrationManager(IM)mayemerge.ThisIMmaysit‘inhouse’,orwithinthebroadernetworkofpartners,oradjacent.TheIMrolewillprobablynotbeasimpleassemblageofalltheorthodox/legacyskillsets.Understandingandmanagingcomplexadaptivesystemsmaybeanewkeycapabilityforexample.HencetheIMmaynotoriginatefromtheCRE&FMsector.

The journeyWehavetoknowwhatwewant.Themorefocusedweare on aligning our requirements then the better we can alignourdeliveryofCRE&FMsolutions,whichwillmeaninvestingeffortinbeingbothstrategicandtactical.Thebusinessbenefitmustinformtheintegration,nottheotherwayaround(asiscurrentlypursued).Thevalueofintegration(verticalandhorizontal)hastobeconsideredinthecontextoftheoverallsolutionandnottheindividualpackagesofworkthatthecorporationhasdecided to outsource.

Suppliersneedtoworkonandbedrivenbythebestservices and solutions that drive client/customer benefit. ThiswillrequireaculturalshiftandamindshiftinthesuppliersectorandbytheclientCRE&FM.Inparticularthisshifttointegratedoperationsrequiresthemultiplefunctional,geographicandcollaboratorsilostoworktogether to drive improvements and innovation within the overallsystemtothebenefitoftherealcustomer/consumer.

Process and managementRatherthantalkaboutintegratedmodelstoaddress thecurrentCRE&FMenvironment,whynotchangetheentiremodelinanintegratedmanner,makingitmorerelevant to the business it supports rather than the propertyindustry?Theimperativeisreallytomakeeffectivenessthefocusofintegratedsolutionsand notjustefficiencyandconvenience.Meanwhile, the technology to support integrated operations is advancingbasedonimprovingtheoperationalefficiencyoftheexistingorthodoxies,hencesomeurgentthinkingisneededifthestepchangeineffectivenessistobegrasped.CRE&FMorganisationsseekingintegratedsolutions will need to define integrated problems and thenleveragetheexpertiseoftheirsuppliersen-masse.Synergy,thepotofgoldattheendoftheintegratedsolutionsrainbow,requiresadvancesinpartnering,‘intelligentclient’andbusinessrelevancetoleadchangesinCRE&FMorganisationalprocesses.

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24 05 INTEGRATED SOlUTIONS

TechnologySofarthetechnologyhasledthechanges.Catch-up isneeded,lestthetechnologysimplyconsolidatesinto a smarter way to support the legacy processes and legacymindset.Frameworkssuchas‘SoftLandings’(www.bsria.co.uk/services/design/soft-landings/)canbeusedtopromoteintegrationbetweenservicelines.Thisrequiresestablishingabriefwhichwillinvolvethedesignteaminaftercareservices.Suchmethodologiesclosetheloopbetweendesign,constructionandoperationandwouldperhapsbealogicalstartingpointforanintegratedsolutionsframeworkforCRE&FM.

Somecontributorsfeltthatthetechnologyrequiredtosupport integrated operations and integrated solutions isalreadyinplace.IntegratedWorkplaceManagementSystems(IWMS)offersacomprehensivetechnologyplatformandcanalreadysupporttheeffectivedataandprocess integrations needed to underpin integrated solutions,buttheplanforthesolutionshastobetotheforefront.Whilstthetechnologyisafacilitatorthatallowsintegration,itcannotmaketheintegrationhappen.

From an operational and data/process management perspective,therearesomekeyprinciplesthatneedtobeinplace(notethatthesedependonpartnerships,datasharing,andcommontechnologyplatformstovaryingdegrees).

• Data:Theremustbeasingle‘goldensource’ofdataforusebyallusers.Thisensuresaccountabilityandfocus,savesondoubledataentry(anderrors!),andmeansthatallreportingisconsistent.Italsoleadstogreater integration and communication as each data usermustrelyonothersinthechain.Amoreimmediateissueisthelegacyofpoorattentiontodataquality.DataqualityhasbeenpoorlyrespectedacrossCRE&FM,andlimitationswithinexistingsystemsmeanitwillbedifficultnottoreplicatedataorbuildinsomany checks that any initial value is diminished.

• Platforms:ThekeyissuefortheopenXML-basedweb services already available is how quickly and how consistently they are adopted by the industry.

• Interoperability:Inordertotrulystreamlinethesupplychainnetwork,systemsneedtobeinteroperablebetweentradingparties.Wecannotaffordtofindourselvesinanotherversionoftheproprietarygamesconsoletussle.Inadditionweneedsystems that can easily operate on a many: many basis,whichiswhyourindustryneedstoparticipateand engage with interoperability initiatives such as OSCRE(www.oscre.org)andthebuildingSMARTAlliance(www.buildingsmartalliance.org).

CaveatsTherearehugeculturalandlegaldifferences(suchasdataprivacylawsacrossdifferentcountries)whichareamajorfactorforglobalcollaborationsandglobalCRE&FMplatforms.Plus,therearesomeimportantpotentialblockers over security. For suppliers the scope to use hostedapplicationsiskeytodeliveringservices,yetrequiresthatdatabeprovidedandreceivedfromelementsoftheclientbusinessthatmayhavegoodcausetobeconcernedaboutdataandplatformsecurity.Highlysecurity-sensitivebusinesseswillhavetofindasolution,ormissthedividendsofthisgamechangerinitiative.

Anotherkeyquestioniswhetherclientsshouldcontinuetoownandholdallofthedataontheirownsideofthefirewall.Whataretheoptionsforthesharingofkeydata across external applications and providers who thenfeedintotheclientdatarepository?AndisthereenoughawarenessofthistopicintheindustrytochangethewayIWMSisbeingdeployedtoday?

The impact of integrated solutions on CRE&FMInordertomovefromthecurrentfragmentedapproachtoservicedelivery,CRE&FMwillhavetoadoptamorestrategicapproachtosolutiondelivery;anapproach thatconsidersthewholelifecycleoftheCRE&FMproposition.Thismustencompassaholisticviewfrombusinessstrategyandalignment,design,serviceandsupportprovision,policies,technologyinfrastructure,maintenance,communicationandcontinuousimprovement.TheCRE&FMorganisationmustfindawaytoorganiseitselfaroundthis,ratherthanviceversa,andtorewardtheindustryfortheextravalue-addofholisticeffectiveness-focusedoutcomes.

A more strategic approach to solution delivery is needed to move from the current fragmented approach

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06 PARTNERSHIPS 25

06 PartnershipsBy John Hinks, with Roy Schumacher and Bruce lerner

The question:TheCRE&FMindustryhaslongtalkedaboutthebestsupplierrelationshipsbeingpartnerships.Whatarethecharacteristicsofthemostmeaningfulandcreativepartnershipsandcontext(s)inwhichtheywillmostlikelysucceed?

The context:For most industries true partnerships between providers andsuppliersarekey.Increasinglycustomersarebeingdrawnintothismixaswell.CRE&FMhasbeentalkingaboutpartnershipforalongtimebuthavewe,asanindustry,reallysucceededinmakingthemostofsuchrelationships?Whatcanwelearnfromotherindustries?Whatisthedifferencebetweenasupplierpartnerandabusinesspartner?Whatdoweneedtododifferentlyinthefuture?Anddoesthenatureoftherelationshipbetweenlandlordsandoccupiersneedtochange?

The response:Bydefinitionpartnershipsinvolvetakingpartinanundertakingwithanother,orothers,andinthecontextofbusinessthiscommonlyincludessharingrisksandrewards(ideallyaligningthemwheretheyarebestmanaged).Therearemultipletensionsinherentintheway procurement and contract management operates today,andalsohowCRE&FMoperateswithinorganisations,andthesemakepartneringachallenge.

Thescopeforpartnershipsuccessishighlydependentontheoperationoftheclient/supplierinterface(s).Ourindustry’s‘partnerships’arefrequentlymadeupofgroupswithdivergentandoftenconflictingobjectivesandgoals.Thechallengefortherelationshipbetweenthe service provider and customer is to achieve true understandingbetweentheparties,whichcompetingprioritiesorapproachesoftencompound.Itiscommonformisalignmenttooccurwhensuppliersfocusonfinancialperformanceandhowtoworkaroundorinflatethecustomer’sneeds.Thedisaggregationofprocurementandsupplier-managementfunctionswithintheCRE&FMclientorganisationexacerbatesthispossibility,plusitopensupthecomplicationofcompetinginternaltargets.Client-supplierrelationshipscanbefurtherunderminedwhenseparateclientprocurement departments seek to renegotiate service ratesmid-term,purelytoreducecosts.Tensionscanarisefromtheotherdirectionaswellofcourse.Somesuppliers will base their operating models around reachingforthecontractateveryopportunityshouldarequestorchangebe‘outofscope’.Thesefactors,plusanemphasisoncompliance,commonlysqueezethelife

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26 06 PARTNERSHIPS

outofthepsychologicalagreementdimensionofpartnerships. Metrics and balanced scorecards that measuresupplierperformancearefineformanaging acontractbuttheydon’tdriveperformanceinthemselves,indeedtheyoftenreinforcetheconventional‘master-servant’mentality.Thisconstrainsthepotentialforpro-activeimprovementandinnovationtoo,especially since traditional compensation structures typically assign little or no monetary value to these.

Thereareofcourselimitstowherepartnershipcanmeaningfullyoperate–landlordsandtenants,forinstance,haveforthemostpartdirectlyoppositeinterests.However,the‘growtogether’opportunitiesfortheindustryarethere,butuntilprovidersandcustomerstruly want to act as a unified group and are prepared to overcometheexistingobstacles,theus/themmentalitywill always be the result.

The future – changes in perspectiveSuccessfulpartnershipsarenotcreatedovernightbuttaketimeandeffortfrombothparties.Truepartnershipswillbedrivenbyacommonvisionforthepartnership,commonormutuallycompatiblegoals,transparency,and trust. Metrics will evolve to accommodate the need forallmembersofthepartnershiptoachievebenefits.Mutual learning will be crucial – working together to continuouslydobetter,toreachhigher,topush.And ofcourseopencommunicationiscritical.Basedonthis,trustcanbenurturedandtheeffective‘growtogethermodel’thatmanyclientsandserviceprovidersseekcandevelop.Withthiscommitmentitwillultimatelybepossible to break down the silos and unite all support servicesacrossinternationalorganisations.Inmany-to-manypartnerships,theresultingone-serviceteamwillservicetheneedsofallemployeesregardlessofwhichcompanytheyworkfor.

Thetruevaluethatgoodsupplierpartnershipswill provide is the ability to positively support the company goalsandthemandatesrequiredofCRE&FM;andtherebyproactivelysupport,guideand/orleadCRE&FMprojectsandoperationstopositiveresults(forallpartners).

The journeyWhentwoormorebusinessentitiessuccessfullycometogetherinpartnership,it’sbecausetheycomplementeachother,theysharetherisksandrewards,

underpinned by the same or mutually compatible values andethos.Therelationshipandbehavioursdisplayedbetweenthesepartnersarenotthoseofclient-supplierbutoneofcomplementaryequals.

Fundamentally,partnershipsarebuiltandsustainedonopennessandtrust,togetherwithconsciouslyshared riskandreward.Hence,forCRE&FM,realpartnershipswillrequireasignificantrethinkingofthetermsthatunderpinthebusinessrelationship,alongwithanemphasisonthenon-financialaspectsthatcharacterisethemostsuccessfulrelationships.Thesewilltaketime tobuildandwillneedtobenurturediftheyareto be sustained.

Partnershipsneedtodeliverintermsofthefundamentals:generatingbetterbusinessvalueandstrategy,collaboration,culturalalignment,jointgovernance,willingnesstochallengethestatusquo,commitment to developing customised processes and outcomesandwillingnesstosharerisks.Thiscreatesthefoundation,buttruealignmentinapartnershiptakesmuch more to sustain culture and shared business understanding.Itisfundamentallyimportantforcustomers and service providers to grasp the opportunitytogrowtogether,whichrequirestherightenvironmentcoupledwithpeoplereflectingtherightdemonstrated behaviours. Only then is it possible to create a stage where trust can develop because there is nofearorbacktrack.

Whatdistinguishestheoperationofapartnershipfroma simple contract is that it involves a psychological agreement.Thisissubtle,asitdemandsengagementfromthepeopleinvolvedandasharedintentiontoattaincommonormutuallycompatiblegoals,whichcanbe alien to those used to operating within a contractual service level agreement. More productive partnerships will be realised when we can find a way to align and synthesiseourobjectivesandrealisethatitistheintrinsicvaluesofthepartnership(trust,commonunderstanding,opencommunication)thatreallybringthebestoutcome.Thisisacrucialissueformany-to-manypartnerships such as would be involved in creating an integratedservicesplatform.Hereinliesanimportanttensionthathastobefacedupfront–veryoftenthemultiple providers a client would like to have in a partnershiparealsocompetitors,creatinganinherentconflictforeffectivepartnerships.Theideathatallmembers are rewarded/compensated as a team when andifoneormorecommonobjectivesareachieved has merit here.

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Thereareseveraloperationalfacetsthatwillhavetoberethoughtiftheaspirationofpartnershipistoendureanddeliverforallconcerned:

• Compensationriskandcost-recoverymodelswillneedtobefullytransparentandallrisksneedtobequantified and shared within a structure that rewards innovation and creates a shared compensation pool forcustomerandvendorpersonnel.Abalancedscorecardneedstobejointlydesignedandincludeagovernanceprocessthatisfact-basedandobjective.

• Opencommunicationwillmeanthatthetendency forserviceproviderstotryto‘educate’thecustomerbeforethecustomercanoutlinetheirneedswill dropaway.Accordingly,theCRE&FMcustomerorganisation will need to demonstrate its commitmenttolistenwithoutbiases,considerwithoutjudgment,actwithoutprejudiceandrewardfairly.Theconceptofopencommunicationmayneedtogofurtherstill.Forexample,clientsmayinvitetheirsupplierstodoapresentationontheirviewsoftheclient – warts and all – not as a sales pitch but as an honestdiscussionofwhatisgood,badandugly,fromtheprocurementprocess,servicedeliverythroughtopaymentprocess.Thisexercisecouldhighlightsomerealopportunitiesforchangeandcouldhelpfostermeaningfulpartnerships.Plus, the client may come to recognise common issues emerging across multiple suppliers.

• Inadeeppartnership,eachparty(orstakeholder) will be anticipating gaps and initiating continuous improvements or innovations to move the delivery toworldclass.Forinstance,serviceproviderswillanticipate and deliver a communication or solution withoutpromptingfromtheclient.Thisiscrucialtothe partnership evolving – real innovation only occurs whensufficienttrustexiststoenableprovidersandcustomers to take risks together.

Partnershipsrequireboth/allpartiestoco-operate,but inCRE&FMtheclientisthegatekeeper.‘Enlightened’clients,withadesiretocollaborateandworkwithmultiple partners in a constructive and mutually beneficialway,willbeneededforpartneringopportunitiestomaterialise.Wherethegapbetweencurrentpracticesandfullpartnershipistoogreatfortheclienttofeeltheycanbridgeitinonestep,theycouldactivelyencourageallsupplierstoexceed‘nextlevel’expectations.Thiscouldbedonebyengagingin

measurable supplier relationship management with the client,andusingthistodevelopaphilosophyofcontinuous improvement as well as proactively generating and submitting new ideas that will drive year-on-yearimprovements.

Inconjunctionwiththis,itmaybehelpfultocreateacollaborativetarget,saythedevelopmentofanintegratedqualitymodel(embracing,say,ISO9001,14001and18001?).Thiswouldmeanthatallpartieshave to share process and procedures and knowledge. Cruciallythiswouldalsomeanthatclientandsupplier(s)would have to work in true partnership and collaborate andshareplatformsortheprocesswillfail.AnISO-based integrated quality model is also independently auditable,sotheissueofcompatibilityofmetricsmaybe addressed obliquely.

Ultimately,partnershipsstandorfallontheattitude ofthepeopleinvolvedandtheirapproach.Sowhat fuelspassionandengagement?Thebestorganisationscreate working environments and business cultures thatempowerclient-facingresourcestoinnovate and improvise to delight the customer and they build models to recognise and reward that unexpected but critical behaviour.

And what will tomorrow look and feel like?Thesimpletestofapartnershipateverylevelforeveryengagementiswhethertheexperiencewaspositive;onewhereyoucouldtogethermoveforwardinawaynotpossible apart.

Procurement and contract management currently cause multiple tensions

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28 07 SOURCING PROCESS

07 Sourcing processBy John Hinks, with Alan Butt and Cheryl Shepherd

The question:TheCRE&FMindustryoftenusesatwo-stageRequestforInformation/RequestforProposal(RFI/RFP)approachtosourcingitssuppliers.Isthisthemosteffectivewayofachievingthesevitalrelationships?

The context:SeveralgenerationsofRFI/RFPprocessesinboththeprivate and public sectors have arguably led to increasinglycommoditisedandundifferentiatedproposalsfromsuppliersthatcustomersfindincreasinglydifficulttochoosebetween.Theyresultinunderwhelmingservicesthatachievemodestprofitlevelsatbest.Andtheprocessitselfconsumessignificantamountsofresource,timeandmoney.Isthisthebestwecando?Howcanweimprovethiscriticalprocesstoencouragebettersolutions,greaterdifference,satisfyingoutcomesandmuchlesseffort?

The response:AtraditionalRFPsourcingprocessisusuallyquitelengthyandtime-consumingforboththeclientandtheserviceproviders – such procurement processes can take anywherebetweenninetoeighteenmonths.Incontrast,businessenvironmentsandobjectivesareevolvingsorapidlythatthescopeofservicesandcommercialsolutionscanbeoutofdatebythetimethevendorhasmobilised(and,eitherway,willcertainlybesolongbeforetheendofthefirstcontractterm).Abiggerchallengeoriginateswheremeasurementsofeffectivenessare

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07 SOURCING PROCESS 29

notrelatedtooutputs,forinstancethecustomers’experiencesoftheservices.Indeed,therearefrequentlydisconnectsbetweentheclient(whopays),thecustomer(whocommissionstheservices),andtheconsumerwhoexperiencestheservices.Thetoolsofprocurementarepartoftoday’sproblem.ThetraditionalgoalofanRFP istogetalike-for-likecomparison.Whilethisisgreatforsomecommodityproducts,thelimitationsofthisbecomeclearwhenprocuringcomplexservices.Evenwhereclientsaskforcustomsolutionsfortheuniqueaspects oftheirportfolios,thecurrentapproachtoprocurementmeansthatCRE&FMprofessionalsinthesuppliertrytocutandpasteboilerplateresponses,andthencomplainaboutfeecompression.Thequestionarises,doesthecontinueduseofthisapproachactuallyconfoundinnovation,especiallywhereitencouragessupplierstoregurgitate what they think clients and customers want to hear?Arewelookingataviciouscircle,andifsohowdowebreakoutofit?(SimilarviewswereexpressedintheMarketdifferentiationtopic,seesection10).

TheviewfromtheCRE&FMindustryisthatmostcorporate procurement departments lack the breadth anddepthofindustryknowledgenecessarytobetteralignaworld-classCRE&FMsolutionbasedondeliveringbusiness-enhancingservicesandthatthisconfoundsthings.However,itseemsthatCRE&FMandprocurerseachthinkabouttheotherinasimilarway,bothconsideringtheothertobetooslow,tooconstrained by process and struggling with limited options. Hence clients and suppliers alike who seek to achieve better qualityoffitand/orcompetitiveedgefromsupportservicesfaceaseeminglyintractableproblemwithout a gamechanger innovation in the overall approach.

The future – changes in the sourcing processForcommoditisedservices,e-sourcinglookscertaintocontinuetoshortentheRFI/RFPprocessbyhandlingthesebasicservicesviathere-useoftemplates(forinstance,locations,services,corporateobjectives).e-sourcingtoolsalsousuallyhaveadatabaseofknowledgeablesupplierscapableofperformingtheservicerequired,sowhilsttheyareefficientthescopeforinnovationisboundbythesystemitself.

For complex services – where the sourcing process needs tocapturedetailsofasophisticatedsolution,tostreamlinesurplusactivitiesandtofacilitateamoreoutcome-focusedandcollaborativeapproachbetweenthebuyerandsupplier–tomorrow’ssuccessfulandefficientprocuringofoutcome-basedserviceswillhavetoinvolveoneormorealternativeapproaches.Theideaofoutcome-based(ratherthantask-based)approachestodeliveryisonewhichoffersgreatpotentialforastep-changeintheoverallqualityofservicedelivery.Here,the desired outcome is agreed and the supplier has flexibilitytoinnovateandtodesignthemosteffectiveroutetoachievingtheoutcome,thereforealigningoutputs to needs and potentially reducing costs through bettertargetingandproportioningofresources.However,thekeychallengetoachievingthismaybethebuyer’swillingnesstorelinquishcontroloverdeliverytasksandallowtheirsuppliertodefinethese(indeed,there have been several examples where the client has attemptedtomanagebothoutputandinputcriteria!).

Atruepartnershipwouldlikelybeneededtoachieveanoutput-basedapproach.Theefficiencyandeffectivenessgainsfromthispartneredprocesscomefromtheclientandprovidersworkingjointlytogethertocreateasolutionviaatransparentmethod.Assumingthatthebusinesscaseiscorrect,theincreasedinitialcostsandresourcingchallengesofthisapproachstandtobefaroutweighed by the benefits that a more sophisticated solutionyields.Theimpactthiswillmakeforclientcorebusinessactivitiescouldbesignificant,andultimatelycouldimpactonshareholdervalue(forexample,wheretheserviceissupportingbusiness-criticalsystemsand/orbusinessproductivity).Theimmediatechallengestoattainingthisfutureseemtobetwofold.Alone,thetraditionalRFPprocessisinsufficient,soitisessentialfortheclientCRE&FMorganisationtocommitthetime/resourcesandflexiblethinkingrequiredtoopenupthepossibilityofthisapproach.Also,thereislikelytobeaveryshortlistofsupplierswhoaregenuinelysuitedtorunning with such an opportunity right now – hence mutualtrust,togetthejobdoneinthefashionrequired,andexperiencewillbedefiningqualitiesneededtotakeupthechallengeofchange.Earlyadopterclientswillgetthebenefitofthepickof the market.

Commercial solutions can be out of date by the time the vendor has mobilised

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The journey

For complex servicesThe‘youaremypartner...aslongasyouarelowbid’attitude will have to be revisited.

Animmediateobjectivewillbetogettherightshortlistofsuppliersbyidentifyingandusingtherightcriteriafortheir selection. For services that are likely to have to adaptoverthedeliverylifetimeofacontract,theselectionofsupplierswillneedtobebasedontheirability and aptitude to adapt and collaborate with changingbusinessimperatives(ratherthanonpricealone).Theclient’ssuppliermanagementwillneedtobeadaptivetoo.Thiscouldseetheclientengagingwitha(limited)numberoffirmstosolveadefinedandspecificbusiness need with a view to evolving the service profile overthedurationofarrangements.

Theselectionofcandidatesupplierswillofcoursebecrucial–hencethemosteffectiveselectionprocessesmayemployanumberoftechniques,rangingfromworkshopstorealtrialprojects.Whatif:

• eachoftheRFPcandidatesisofferedaone-weekinternshiptoreallygettoknowtheorganisation?Thiswould increase the chances to design and deliver a ‘spoton’offer,plusitwoulddeliverthepossibilitytodiscover particulars that have not been put on paper (say,fromlearningtacitinformation)

• candidatesuppliersaretestedusingsampleprojectsbased,say,oncasestudies?Thiswouldhelpbothparties understand their mutual compatibility.

Theremaybeexampleswhichcouldbeagoodstartingpoint–forinstance,theSCORmodel(forsupplychainoperations),whichhasevolvedovertimetoallowcompanies within a traditional supply chain to define majorprocesses.Thismightbeamodeltoconsiderindefiningthe‘supplychain’ofrealestateservicesorthelifecycleofrealestate(http://supply-chain.org/scor).

For other services• AnalternativetotheRFI/RFPprocessmightemerge

intheformofamarketmapping/leaguetable,publishedsayonceayearusingagreedindustry-widecriticalsuccessfactorsorKPIswhichdifferentiatethevalueoftheseservices.Thiscouldhelprationalisethetime-consumingRFIstagetoenablegreaterfocusontherelationshipandqualityfactorsattheRFPstage.Ineffect,thiscouldhelpgettherightclient/supplierteams together a lot earlier in the process.

• Thejourneywillbehelpedbylearningfrom problems with previous attempts to change the RFI/RFPprocess.Forexample,theoilindustrytried amodelwheresupplierspaidtobemembersofa‘club’.ItwasmeanttoreducetheRFI/RFPprocessasorganisationscould‘see’whatsuppliershadtoofferupfront.Sadly,theprocurementdepartmentskeptonproducingtheirownbespokeRFI/RFPsandsuppliersbecamefrustratedatpayingforanadditional(redundant)process.Clearlychangehastobereciprocal,andideallyshared.

What will tomorrow’s sourcing process be like?Therewillstillbenouniversalpanacea.Forsophisticated,evolving,orcomplexbundlesofservices–allofwhichshouldnotbeprocuredasiftheywerecommodities – sourcing and supplier management will beaboutachievingthebestvalue,notjustthelowestcost,andwillhencebecomplexandrequireongoingflexibility.Thiswillbegreatlyaidedbyanearlyfocusontransparentservicespecification,andonpricingaccordingtoclearcustomerobjectives(priceandnon-price),whichareoftendoneattheendofnegotiationstoday.Accordingly,sourcingprocessesforsophisticatedservices will begin with the sourcing party asking the apparentlysimplequestion:‘Whatdowereallywant?’UltimatelythisdependsonagreaterlevelofsupplierandclientCRE&FMcollaborationwhendevelopingtheproposals. Hence while there was a wide agreement thataneasier,streamlinedprocesswouldbebeneficial,thedifficultywillbeindefiningexactlywhatthatnewprocess should look like and how it could be easily appliedacrossserviceproviders,includingglobalisedprovidersintheUSandEurope,etc.InordertomaketherightdecisionsclientCRE&FMprofessionalswillcontinuetoneedmuchofthedetailalreadyrequestedintheRFI/RFP(costs,financials,services,etc.).

The‘intelligentclient’willbeworkingwithsupplierstochangethegame,todeliverserviceinnovations,newlevelsofsavings,andtoenhancethetruevalueoftheserviceoutputsforthebusiness.Maybetheterm‘RequestforCollaboration’(RFC)willbeaddedtothesourcinglexicon?

It will be about achieving the best value, not just the lowest cost

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08 VAlUE-BASED PRICING 31

08 Value-based pricingBy John Hinks, with Paul Wright and Will Halford-Maw

The question:Whatwouldavalue-basedpricingmodelforCREserviceslooklike?

The context:AlotofcurrentpricingmodelsorCREservicesarguablydo not properly align reward to value derived by the customer.Toooftentheyarebasedonoutdatedindustry practices and historic knowledge silos that need crudeadaptationsandadjustmentstobesuperficiallyacceptable. Most service industries achieve rewards (profit,customerloyalty,etc.)alignedtotheperceivedvaluethattheydeliver(andasapartofthattherisksthattheybear).IfCREserviceswerepricedinthiswayhowwouldtheydifferfromcurrentpractice?Whatmightabettermodellooklike?

The response:Severalaspectsofthecurrentapproachtovalue-basedpricing were seen as problematic:

• Howthevaluedeliveredfromserviceswasviewedasopposed to usually determined.

• Howthevalueadjudgedtobewithinservicescorrelates with the contribution to business process.

• Therelationshipbetweenfees(andfeedynamics)andthevalue/costofservices.

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32 08 VAlUE-BASED PRICING

Exploringthesequicklyopenedupfundamentalquestionsofwhethervaluecanandshouldbethoughtofinquantitative/financialterms,qualitative/serviceterms, oramixtureofboth.Itwasobservedthatwhilstprice and other quantifiable inputs are easier to measure (andthereforeeasiertodevisearewardmatrixaround),thesoftbenefits(suchasclientfeedback,environmentalperception,andquality),crucialastheyare,involvethesubjectiveandarethereforeviewedasconfoundingsimplequantitativecomparison.Hereinliesthefundamentalrubwithcurrentapproachestovalue-basedpricing.Whilstitwasacknowledgedthatapositive,productiveworkplaceenvironmentcanhaveamajorimpact(andthereforevalue)forthebusiness,theapproachwetaketoevaluatingthatimpactisshortoftheevidencerequired totakeusbeyondtoday’sprice-centricapproach.

Challengingthisexistingsystemof‘value’measurementwasgenerallyacceptedtobeacomplexprospect.Thecommonviewwasthatthetraditionalbasisoffeesneedstobequestioned(specifically,thatbrokerfeescontinuetobebasedonapercentageofrent,hencethehighertherentthehigherthefee).However,moreconcerning than this was where the industry has moved onfromfee-onlymodelstodealswhere‘free’consultingisofferedinanefforttobalancethevalueequation, orwhererefundsandrebatesareavailable.Suchengagements are surely an admission that the prevalent brokerfeearrangementshavelosttouchwithrealvalue.Itwasthoughtironicthatthese‘free’serviceswereoftenwherethegreatestvaluelayintheserviceforthecustomer.Itwasagreedthatthisdynamicisskewingthemarket,especiallywherethehighvalueconsultingisgivenawayforfreeonthepromiseofadownstreamproject.Whilstitwasobservedthatsurelyanycompanycommoditisingtheirfeesandgivingawayconsultingistravellingdowna‘dead-end’road,itwasagreedthatsomethingfundamentalneededtobechangedaboutthecurrentstateofpricing.Itwasalsoobservedthatgrowthofcommercialspecialistsfocusedondevelopingbenchmarkingprojectsandcontractssimplyreinforcedthe status quo in a similar manner to how the financial ratings industry dominates.

Therewasalotofdebateonfeesandfeerates.Thiscommentchallengedtheconventionwell:“Whennegotiatingadeal,whyisthefeethefirstthingcustomerslookat,evenwhenyourproposalreducestheiroveralloperatingcostby10%,15%,or20%?Shouldn’tthefeebeirrelevant?Shouldn’tthesupplierdeservethatfeefordeliveringthatlevelofperformance?Ithinkmanyclientsviewthefeeaswaste,whileignoring

thetruepossibilitiesforefficiencyimprovementsintheremaining95%ofthecostsofdeliveringtheservice.”

Thecontributorwhobestsummarisedthebigissuewithtoday’sapproachtovalue-basedpricing(hereinthecontextofoutsourcingpartnerships,butthecommentappliesgenerally)said:“Arewecollectivelyenhancingtheexperienceofourend-usersinlinewiththeexpectationsofthepartnership?Ifso,arewedoingthiswiththemostefficientuseofresources?Ifnot,howdoes the program or our behaviour need to change to achieve the price/value ratio originally intended with the outsourcingdecision?”

Value-based pricing in the futureItwasgenerallyagreedthatinthefuture,feeswillbe(havetobecome)betteralignedwiththevaluetheyaredrivingforthebusiness.Thecommoditisationofserviceswillsurelypushtheindustrytoabreak-pointinnovationinthisrespect.Plus,therewillbeanadvanceinhowsharingtherisksandrewardsofanimproved‘performance’arehandled,whichwillstartwiththeirdefinitionandcaptureinsomewaymoremeaningfulthanthetraditionalServiceLevelAgreement.ThiswasseenascrucialtotheevolutionofmeaningfulpartnershipsbetweenCRE&FMcustomersandtheirsuppliers.Inparticular,thiswascentraltoagreeingasuiteofmeasuresthatpartnerscansustainablyoperateasthedriverofreward.Henceaprerequisitewillbethatperformancemodellingwillidentifythemeasuresneeded to be captured and monitored to support a consistentgovernanceprocess.Thenumberanddepthofmeasureswillvarybetweenclientsaccordingtotheirgeneralneedsandalsotohowneedsdifferacrosseconomicmarketcycleandbusinesscontexts.Onesizewillnotfitall.Asystematicvalueratingsystemwillallow pricing and evaluation to go beyond inputs and rebatesonassets–issuessuchasavoidedcost,managedrisk,satisfaction,andotherlong-termbusinessvalueissueswillfeature.Asignificantpartofthevalue-basedfeewillrelatetothesuccessinmeetingand exceeding corporate values.

In the future fees will be better aligned with the value they are driving

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08 VAlUE-BASED PRICING 33

The journeyThejourneywillhavetoinvolveafundamentallynewapproachandcorrespondingnewmethodsforcalculatingvalue.Theemphasisonmetricsoftenmissesthepointaboutthecomplexityofdefiningvalue.Valueiscomplex,andaresonancebetweentheclient’sneedsandtheprovider’sservicescangenerateavaluebonus.Thetrickisensuringalignmentbetweentheclientandprovider to agree this value so it can be recognised whenitemerges.Ultimately,ofcourse,theclientisthefinalarbiterofvalue,henceitisincumbentontheservice provider and client to align themselves on value expectation(s)fromtheoutset.

A move to a business outcome model of valueOneprospectivevalue-basedpricingmodelforCRE&FMservicescouldaligntotheframeworkoftheservice-profitchain,whereinvaluedrivescustomersatisfactionandemployeeproductivitydrivesvalue.Itwassuggestedthat one way to start measuring and applying this would be to deploy employee engagement results in the providerbasewhich,baseduponthoseresults,wouldleadtoincreasedordecreasedrevenue.Itwasobservedthatvalue,asdefinedhere,iswheretheclienthasgainedmorefromaproduct/servicethantheythinkitisworth.Additionally,valuehasanemotionalaspectandavalue-basedpricingmodelwillneedtoaccountfortheintangiblesthatcreatevalueforclients.Astarterforthiswould have to be better engagement with the business regardingthevaluetheyderivefromtheworkplace.Coupledwithgreatertransparencyregardingthecostoftheirexistingspaceandservices,itshouldbepossibletoapproach value as an output expressed in terms that relatetothebusiness(andthebusinesscanrelateto).CRE&FMclientswillneedmoregranularinformationfromsuppliers,andconsistentwaysofmeasuringwill beanimportantsteptowardmeaningfullike-for-likecomparisons(ifsuchareneededandrelevant).

An example – value related to timing/timeValueisclearlynotaconstantforallseasons.Rather itishighlycontextual.Timing,forinstance,tendstobeunderplayedorevenignoredinthevalue-based-pricingconcept.However,foradynamichigh-performanceorganisation(managingforexamplefastgrowth)speed

tomarketcouldbethemostimportantdriver.Yet, whiletimingisoftenaspecifiedtargetorevenakeyperformanceindicator(KPI)forsomeprojects,itisrarelyproperlyquantifiedintermsofvaluetotheclientinvalue-based-fee-pricing.Inthiscontext,thekeyadvancewouldbetodeterminethevalueoftime(businessesshouldknowtherevenueprojectionsforaneworexistingenterprise)andtoestablishaccountabilityforspecificmilestonesforbothclientandserviceprovider,alltiedtothepricingscheme.Thisshouldencouragethedeliveryoftime-relatedvaluetothebusiness.The‘timeismoney’indexwillactuallyvarysignificantlybetweenhighandlowperformanceorganisations,too.ThechallengeishowCRE&FMisableandpermittedtoaccuratelycapturethetruevalueofthebusinesses’time.

Flexibilityisanotherkeyvalue-based-pricingissue.Flexibilityisveryimportanttomostbusinessestoday,andisalsoessentialforsupplierstomeetcustomerexpectations.Aligningthiswithinthevalue-basedpricing model will help keep the partnerships between customerandprovideralive.Itwillmeanthatfrequentlychangingexpectationsandnewrequestsofcustomerscan be supported by a comprehensive service model design which is clearly and appropriately priced. Reactiontochangingmarketconditionswillbeeasierandquickertoo,aswillscenariomodelling‘whatifs’. AttheheartofadvancingtothisistransparencyfromCRE&FMclientsintermsofservicerequirements.Inreturn suppliers need to provide consistent and accurate pricinginformation/indicessupportedbythequalityofmanagement system needed to deliver quality in varying servicesincluding,say,incidentmanagement.Thiswillrequirepartneringand‘intelligentclient’advancesasdiscussed in other topics.

The prevalent broker fee arrangements have lost touch with real value

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34 09 KNOWlEDGE MANAGEMENT

09 Knowledge managementBy John Hinks, with Dave Clute and Kroshina Rodriguez

The question:Theinformationthatweroutinelycaptureandusetomanageperformanceandinformdecisionsisoftenout-of-dateandincomplete.Howcanweadvance to be among the most knowledgeable industries about what we doandthevaluethatwebring?

The context:Alotoftheperformancedataandinformationaboutwhat we do and the value we bring are never captured andislostforever.Mostoftherestsitsindisparateproprietarysystemsunused.Ifwecompareourselvestoasupermarketchainthatcandrilldownreal-timetoanindividualtilltoseewhatisbeingboughtsecond-by-second,andcananalyseindividualcustomerbuyinghistoriesandpreference,andthenaggregateupfromthatlevelofdetailintoanysegmentsandgroupingsforanalysisandlearning;wehavealongwaytogotoimprove.Whatisholdingusback?Whatdoweneedtodotomaximisethepotentialofmodernknowledgemanagementpracticesandsystems?

The response:ItwasrecognisedthattheCRE&FMindustryneedstoinvestinbettersystemsandprocessesformanagingknowledge–fromthecollectionandcategorisation,throughtostorageinformatsthatallowretrievalandanalysis,andalsointermsofre-application.

Severalproposalswerediscussedforoperationsandworkplace-relateddata,suchastheusageofworkspaceanddeskoccupancy,meetingroomusage,plannedpreventativemaintenanceandfaulttrends,cateringtrends,andofcoursetheincreasinggranularityofdatageneratedfrombuildingmanagementsystems.Itwasnotedthatthereisanarrayofknowledgemanagement(KM)toolsonthemarket,howeverthediscussionmajoredonthepurposesandprioritiesofKMitself.

CollectionValidating,reconcilingandconsolidatingexistingknowledge was considered to be complex yet necessary tofilteroutpoorqualityorirrelevantdata.Toolittleattention has been paid to the quality and reliability ofinputdatainthepast,ortothecredibilityandtrustworthinessofsources.Leveragingdataandbusinessintelligenceisthoughttobebestservedbyfewerpointsofentry,assignedaccountabilityandclearinterfaces toensurethatdata(bethatportfolio,operationalperformanceand/oroccupancyperformancedata) flowsnaturallyfromproperlyindustrialisedsystemsandprocesses.Itiscrucialtogettothebottomofhowwelldatasetsreconcile.Forexample,thedataheldinHRdatabasesisfrequentlydifferent(andcategorised, storedandusedfordifferentpurposes)todataindividualbusinessunitshave.IT,CRE&FMandFinancewilllikelyhavedifferentformatsorassumptionswithintheirpeopledatacontenttoo.Whatisneededisa data management approach that ensures integrity and compatibility across databases and uses tools that check forconsistency.Thishastostartwiththeinputdata.

Categorisation Differencesindataprotocols(definitions,classifications)mean that comparability is a complex and obscure issue. Measuringworkspaceisagoodexample.Globalstandardsareneeded(e.g.OSCRE).Itwasnotedthatwhilstsuppliersmaybeabletohandledataonanindividualbasis,therewere multiple competing systems with inherent incompatibilities,andhencedata-comparabilityissues.

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09 KNOWlEDGE MANAGEMENT 35

Nosingleserviceproviderorcustomercansolvethischallenge;acollaborationofglobalenterprisesworkingtogetherissurelythewayforward.AcommonplatformforallperformancemanagementtoolswouldallowCRE&FMuserstocomparablyevaluatecostbenefits.Thiswouldbeabigstepforwardtowardsmeaningfulbenchmarking,andcouldprovidetheplatformforadvancingCRE&FMprocesses.Evenacommontaxonomywouldbeastart,and advances in sophisticated search technology are offeringtheprospectofbetteranalyticalscope.

Storage and retrieval Findingandretrievingtherightinformationatthe time it is needed is crucially dependent on indexation consistencyandcomprehensivity.Itisessentialthatinformationisstoredwitharetentiondate(therearerelateddataprotectionlawsfortheretention/destructionofsomecategoriesofdata).Thiswillallowthecurrencyandcontextofdatatobefactoredintosearchesandanalyses,plusthiscanbeusedtosystematically optimise the balance between live and (cheaper)archivestorage,whichwillalsohelpimprovetheefficiencyofsearches.Thisisanimportantfactor inthelegacyissuesofexistingdatasets–notleasttheformatofhowdataisheld(bothinthesenseofthesoftwareformatandthemodelofcategorisation/indexing),plusthewayinwhichitisaccessed.Itis also important to remember that technology advances canoutstripanorganisation’sbudget,anddisruptivetechnologiesinhandlingoranalysisofinformationcanquickly neutralise competitive advantages.

Knowing what to dispose of and whenAstheamountofinformationwillcontinuetogrowatanincrediblepace,retainingasmuchdataaspossibleforfearoflosingcriticalinformationisonetactic.Intermsofelectronicstoragethiscostslessthanitusedto.However,usingexpiredinformationtosupportdecisionsopens you up to operational and financial risks.

Analysis and re-application Withoutgoodqualityanalysis,dataremainsjustdata.Re-applicationshouldbetheintent,andworkingbackwardsfromthiswillhelpachieveabetterunderstandingofthecriticalitiesofthedesign,managementandoperationofaKMsystem.LookingbackonhowCRE&FMhavehandleddataandinformation

previously(thinkofthe‘value’todayofsomeofthelegacysystems…),itisclearthatthisisnotatrivialmatter.HistoricallyCRE&FMhavedivedtoodeeplyintothesystemsas opposed to looking at what is really needed to support managementdecisionsandperformance.IntuitiveKMsystems could play a key role in helping us to better leveragethecollectiveintelligenceofanorganisation(andavoidingtheparalysis-by-analysissyndrome);butrealisingthepotentialvalueofKMwillultimatelydependoncultivatingacultureofinnovation,collaborationandlearning as well as mastering the technology.

TheentireKMprocessshouldbedesignedaroundthebusinessneed.Thisinturnwilldefinethereportingneeds.Insightsintobothcurrentandfuturebusinessdriverswillshapetheproposedoutput,andthereforethewaysystemsandtechnologyareconfiguredandintegrated.Theprospectsforfuturevaluebeingsufficienttojustifythecostsandmanagementeffortsofupkeepwilltherebybechanged.Creatingtherightbalancebetweenexperthumanengagement,coresystemscapabilityandfunctionalityisalsoveryimportant,asisleveragingdata toincreasetheopportunityforlearningandsharing.

Theapproachesdiscussedaboveareonlysuitableforexplicitdata,andtodatetheymostlyhandlequantitativedata.AneffectiveKMprogramwillalsoincludepeople intheprocess.Accommodatingbothexplicitandtacitknowledge will bring the greatest ability to understand howtheservices(ortheorganisationalprocesses)work,how they add value as well as where they are vulnerable. Itisimportanttorecognisethattheexplicitdatasetwillnot tell the whole story.

ImplementationofaKMsystemisaprocessofpatience,learningandgrowing.Andmostimportantofallistrust. Achangeinmindsetisthereforeneeded.Thereremainsaculture in too many organisations that having knowledge ishavingpower.Tomovetheindustryforwardweneedtoencourage a culture in which sharing knowledge is viewed asthepowerposition.Ifthischangecanbeeffectedthepotential is massive. For service providers there is the scope tosharelearningsfromdifferentaccountsandusethis tolearnhowtoreactto,orbetterstillanticipate,clientchallenges.Andforclientsthepossibilitiesincludethemovetoevidence-basedapproachesforstrategicresourceallocationandoperationalprioritisation,whichwillleadtowardstherealisationofvalue-basedservicemodels.

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36 10 MARKET DIFFERENTIATION

The context:ItcanbearguedthatCREsuppliersaresteadilybecomingmoreandmorealike,and,togetherwithanearuniversalandexclusivefocusoncostreduction,areincreasinglycommoditisedasaresult.AsthiscontinuesitisbecomingdifficultfortheinternalCREteamtoshowit is adding value beyond being a contract management interface.Shouldsuppliersseektobedifferent?Ifyes,howcantheydothisandwhyshouldtheydothis?Ifno,whataretheconsequences?WhatcantheinternalCREteamdotodifferentiateitselfwithintheenterprisesothatitsvaluestandsoutandisrecognised?

10 Market differentiationBy John Hinks, with Richard Trafford and Martin Draper

The question:WhyistheresolittledifferentiationbetweensuppliersintheCREmarketplace,andinCREteamsbetweenorganisations?

The response:Thiswasanintensediscussion,openedwithseveralleading questions:

• Isrealestateprovidingarecruitingadvantage?

• Isrealestateprovidinganoutletforcorporatesocialresponsibility(CSR)aspirations?

• Isrealestatecontributingtobetter-than-industryretention?

• Doestherealestatecontributepositivelytothe brandidentity?

• Isrealestateprovidingaproductivityboostforknowledgeworkers?

• Doestherealestatesomehowcontributeuniquely tosupplychainefficiency?

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Twomajorissueswereidentifiedascontributingtothesechallenges.First,thetraditionalmetricsandservicelevelagreementsusedbytheCRE&FMindustrywereinterpretedasencouragingcommoditisationofservices.Theindustryandclientsalikehavemeasuredwhattheycanratherthanwhatmatters,therebycompoundingthisissue.Asaresult,theindustryhaslostthecapabilitytodiversifyindeliveringthevaluerequestedbythevarioussectors,industries,customers,clientsandstakeholders.Themetricswerealsoblamedforconfoundingdifferentiationandinnovation.Theobservedsaturationandstagnationofthemarketwereadjudgedtobetheconsequenceofthisoperatingforalongtimeinamaturemarket.Second,procurementwasalsoseenashaving acontributoryroletotheproblem,inthatthecurrentapproach to outsourcing does not allow competitors tobedifferentiated(echoedinthediscussionsinthe‘Sourcingprocess’topic–seesection7).Combined,these produce a sales commoditisation in services which alsorestrictsserviceproviders’abilitytodisplaytheirownuniquepropositionseffectively.Inturn,itbecomesdifficultforCRE&FMcustomerstodiscernsuchdifferences,particularlywhereserviceprovidersarerespondinginatraditionalRequestForProposal(RFP)context.Onceallsuppliersoffersamenesstheonlyremainingdecidingfactoriscost.

Supplierindustryparticipantsfeltthattheyprobablyhavemoremarket-readyinnovativeproductsandservicesavailablethanclientsarereadyfor.Hence,althoughthecurrentclimateisrelativelyrisk-averse duetoevidence-basedprocurement,andasaresultinnovationdoesn’tfeaturestrongly,nonethelessproposals by suppliers to create a way out rather than cut a way out are usually well received.

Failuretodifferentiatewasseenbyrespondentsasleadingtoacycleofdecline.Butisthissimplyanunavoidableconsequenceofthenatureofthemarket,orisittheresultoftheprocessandsharedattitudeswithintheCRE&FMindustry,whichcanbechanged?Theviewwasexpressedthattofindoutwewould needtochangetheprocess,andthatthismaysimplyrepresent the next logical next step in the maturation oftheCRE&FMmarket.

The future – changes in perspective“Competitionhasbeenshowntobeusefuluptoacertainpointandnofurther,butcooperation,whichisthethingwemuststrivefortoday,beginswherecompetitionleavesoff.”Franklin D. Roosevelt

Itwasarguedthatthefuturelayindeeperstrategicsourcing relationships wherein organisations would be opentoarangeofhardandsoftattributeswithintheirserviceproviders.Differencesbetweenproviderswouldthereforebecomeclear,andcouldbeprofoundlyvaluable.Itiscrucialforsupplierstoachievedifferentiationinordertointrinsicallyandwhollybenefitfromtheirinnovations.Bydefinition,suchmarketdifferentiation layinthedetails,andmaybeachievedby:

• clientservicephilosophiesandmethods

• differentbusinessand/orservicemodels

• abilitiestoinvestinnewwaysofworking and partnering

• mutuallycompatiblestrategicpriorities

• broadeningofthescopeofservicesand their integration

• talentmanagementcapabilities

• partneringcapabilities

• compatibilityofdifferingcultures.

Therewasrecognitionthatwhilstdifferentiationmayoriginatewiththesupplierand/orclient,itneedsbothpartiestobeproactiveandtovalueitforittorealise an advantage.

Seekingoutmarketdifferentiationwillbetrulyvaluablefortheclientwhenitdeliverspracticalnewservicesorsolutions.Valuecontributiontothebusinessratherthancostmanagementshouldbecomethefocus.Aspectrumofbenefitswasidentifiedincludinggainsinproductivity(directly,fromspeedtomarket,andviaenhancedutilisationofthebuiltassetandservices),improvedrecruitmentandretentionofbestqualitystaff,employeesatisfaction,sustainableoperationsandbrandenhancement. Metrics to assess value and contribution tothebusinesswouldreflectthisincreasedbreadthofcontributions,withevidencecomingfrombothHRandbusiness productivity data.

Itwasnotedthatattainingthesepotentialbenefitswillrequireanewwayofworkingbyallparties.ThiscouldmeanafuturewhereCRE&FMlooksdeeperatindustryspecialisation,geographicdepth/coverage,servicesexpertise,technologyandtalentforexample,and wheresupplierselectioncriteriafocusmuchmoreoncollaboration and innovation.

CRE&FMgenerallywouldalsobenefitfromdevelopingamorecreativeandmorediverseskill-basetodrawuponinternally,andshouldmakethemostofthediversityof

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backgroundsandculturesthatareoftenpresentintheteam.Thismeansnotonlyhavingindustryprofessionals,butalsoembracingchange-managementandwiderbusinessexpertise.Recruiting‘outsidethebox‘couldhelpbreaktoday’slogjamwhereeveryoneattendssimilarlearninginstitutions,getsassessedonthesamesubjects,attendsthesameadvancedlearningsessions,networkswiththesamepeople,rotatesaroundthesamepooloffirms,andoperateswithinconvergingtechnologyplatformsandbenchmarkingconventions.Thegenepoolisarguablybecomingdangerouslyin-bred.

The journey – howThechallengeisoftena‘Catch-22’–howcansuppliersdemonstratethepotentialfordifferentiationbeforetheyarehired?Viewswereexpressedthatthetraditional RFP-basedprocesswasinadequatefordifferentiatingsuppliersfully.Clientsandsuppliersneedtomoveinacoordinatedmannertoaddressthis.Thismighttaketheformofconsidering,say,thepurposesoftheoccupierandlookingforscopetodifferentiate,viaintegration,across some common priorities such as:

• creatinganenvironmentforpeopletobeproductive

• securingcriticalbusinessprocesses

• creatingabrandexperienceforconsumers and customers

• housinginventoryorcriticalequipment.

Boththeclientandtheserviceproviderneedasharedunderstandingofwherethereispotentialvaluefromdifferentiatingand/orintegratingservicesinnovelways–newcombinations,processes,metricsand/ortryingtoachievedifferentoutcomes.Ifthesupplierhasideasforinnovative services then there need to be mechanisms fordiscussingthis.Inconjunctionwiththis,therealsoneedstobeasharedunderstandingofcriticalriskserviceswherestabilityandconsistencyarecrucial.Whatis most important is the match between what is being offeredandtheneedsoftheorganisationasacustomer.Thevalueisn’tinbeingdifferentforthesakeofitbutinbeing innovative in order to meet genuine opportunities tosatisfyrealcustomers’realneeds–wheretolook forcustomsolutions(possiblyfornarrowpurposes)vs.havingaone-size-fits-allreliableandtime-provenset ofsolutions.

TheclientrepresentativesontheForumnotedthatwhere they had the requisite expertise to negotiate differentiationofservices,thiswastypicallyonlyhappeningaftercontractcompletion.Itwasconcludedthiscouldbeundertakenfromthestartofnegotiations,alsoindeedintheRFPstage,sothatthepotentialbenefitsfromdifferentiation(andalsohowtheymightbemeasuredand,inparticular,howtheymayberelatedtosoftbenefits)couldbeencompassedinthetenderstagesothatsupplierscouldrespondmorefullyfromthe outset.

Whileeachfirm’s‘platform’isunique(supplierorclient),what drives value ultimately is the correspondence between the supplier and their service and the client andtheirneeds.Therewillbeanelementofcultural fithere,andtherolethatkeyindividualsplayintheoperationoftheoverallrelationshipwarrantscarefulattention.Thisdegreeoffitwiththesuppliermaybeworthmorethansimplelowestcostdecisioncriteria,especiallyiftherelationshipdeliverswhatthebusinessneedsandiftheclientCRE&FMteamandthesupplierworkverywelltogether.Theseissuesdependgreatlyonthe lead people in the relationship and the teams that supportthem,deliveringworkeveryday.

Inconclusion,breakingthelogjamandrealisingsustainablevaluefrommarketdifferentiation(and/orservicedifferentiation)willrequirecommitmentsto,andby,suppliersonaperformancebasis(sharedpain/gain)todrivearicherrelationship,differentiatedsolutions,innovationandnewformsofvalue-add.Andsuchcommitmentswillrequiremanyformsofinvestmentfromallparties–financial,personalandcriticallytrust.

The value of differentiation isn’t in being different for the sake of it, but in satisfying real needs

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11 SERVICE qUAlITy 39

11 Service qualityBy John Hinks, with Paul Bullock and Scott Danley

The question:WhatdoestheCREindustryneedtochangetoenableittoguaranteetoitscustomersthattheyaregettingtheservicequalitythattheyarepayingfor?

The context:CREindustryservicequalityisnotanexactscience–farfromit.Alltoooftenserviceperformancestandardswellbelow100%areseentobethebestthatcanbehopedforandarethereforedeemedacceptable(oftenbeingwrittenintocontractsassuch).Insomecasescommercialmodelspositivelyallowforthis(thepriceisunderthetheoreticalcostofresourceneededtofulfiltherequirementandassumesthatthefailuretoperformaportionoftheworkwillgounnoticed).Yetothersimilarserviceindustries(e.g.logistics)showthatthisneednotbethecase.Indeed,takingamore‘industrialised’approach to process and service quality has proved a big stepforward.HowcanCREdolikewise?

The response:Thecomplexitiesofmeasuringqualitywerediscussedextensively,notingthattoooftentheframeworkformeasuringservicequalityisill-definedandover-complicated.Qualityandservicewillalwaysmeandifferentthingstodifferentpeople,howeverthefocusofperformanceassessmentfrequentlybecomesskewedtowardtheprocessofmeasurementitselfratherthanonassessingthedeliveryofcriticaloutputsforthebusiness.Furthermore,withoutthecostreference,theconsumersreceiving a service will have no baseline to gauge whethertheyarereceivingvalue.Aservice-perceptiongapmayexistintheeyesofanend-usereveniftheactualserviceisbeingdeliveredtothe(CRE&FM)defined

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standards.ThiscreatestensionsfortheCRE&FMrole,notably where service standardisation is a primary objectiveandalsofortheserviceprovideronoccasionswhentheyarecaughtinthemiddle(forexamplewhereservice contracts incorporate service levels that are aspirationaland/ordifficulttodefineandachieveconsistently).Apush-me-pull-yousituationcanarisefromthisandexacerbatethingsfurther,withclientsemphasisingquantitativeorinputKPIsandserviceproviders proposing targets that are easy to measure and‘offtheshelf’–neitherapproachnecessarilyprioritisingwhatisofmostimportancetotheclientorconsumer.Thecurrentapproachtooutsourcingcancompound this where the actual inputs to drive the serviceremain,attimes,anearlybestestimate,andthiscandrivefurthertensionintotheoveralloperatingenvironment.Clearlypartofthewayforwardhereisforclientstounderstandtheserviceprovider’schallengesinmeeting their obligations.

Meanwhileavalue-for-money(VFM)dilemmaemerges,and tensions repeatedly emerge over the distinction betweenvalueformoneyandquality.VFMandservicequalityarevieweddifferentlybydifferentstakeholders,fromcorporateleadershiptoCRE&FMclienttotheconsumer.Specifically,theCRE&FMclientexpectsvalueformoneywhilsttheendusersexpectquality.Anothercommon problem area is the disconnect between global andlocalgoals.TheremaybeacorporatemandatetoachieveglobalVFM,yetlocalbusinessesmayinterpretalossofvalueiftheirlocalcostsincreasebutservicelevelsdonot.Attheheartofthisdilemmaisthetensionbetweendefinitionsofexpectation(whereisthebar)andpeople(vision,approach,drive,andculture).

Asaresult,thereisoftenconsiderableeffortexpended onmanagingexpectations,includingdefininganddeterminingtheservicelevelkeyperformanceindicators(KPIs)theyshouldexpect.Thismaydolittleto‘closetheloop’fortheconsumer.Serviceprovidersshouldperhapsfocusmoreonprovingtheirvaluetotheconsumerwithinorganisations(asdistinctfromtheCRE&FMfunction).

The future – changes in perspectiveTheservicequality-perceptiongaphasbeenwidelyresearchedinthepastandthechallengeforthecorporate occupier is how to create a tacit link between thestandardtheywishtoprovideandtheawarenessofconsumersastowhatthisstandardmeans.Closingthisgap requires increased engagement. Only then can the approachtoguaranteeingtheavailabilityofresource

inputs through a transparent service management and deliverymodelbemade.Thismaystillbeintherealm ofthemanagementofexpectationsratherthandetermining service levels based on customer and consumer defined needs.

Theindustrycanlearnfromadjacentindustries (suchaslogistics)wherefocushasbeenplacedondefining products or services such that customers and consumersbetterappreciatetheservice,costandvaluetothem.Theindustrialisationofcoreaspectsoftheservicethensecuresgreaterperformancecertainty aswellasefficiency.

Theemergenceof‘vestedoutsourcing’models(whichencouragesupplierstoinvestinarelationship,onthebasistheycanshareinthepotentialupside)provides anenvironmentwherethecustomer’sfocusisonremovingbarriersforsuccessfuloutcomes,leavingthesupplierresourcesfocusedonserviceexcellenceandcontinuous improvement.

The journey – howThereisnoone-size-fits-allglobalanswertotheissue,sinceeachclientsectorhasitsowndynamics.Itwasthereforeagreedthatforeachlocalcontextthebasis ofprovidingserviceexcellencewouldbetoset‘targets’thatareminimalexpectations(orbusinessrequirements).Thiswouldthenbefollowedbyacontinuousimprovement(CI)culture,coupledwithreal-timeservicelevelreportingbyboththesupplierandclient.Serviceimprovement plans based on previous metrics would thendriveincreasedquality.Thiswouldprovideareferenceframeworkforongoingservicelevelimprovement.Amoreindustrialisedapproachtoservicequalityimprovementcouldbeapplied,whichwouldrequireafulltimeLEANorSixSigmateamtoevaluatecurrentprocesses,weedoutthebrokenones,fixthem,and continuously review processes as they evolve to keepthemfromgettingbroken.

At the heart of any service quality improvement will be people

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11 SERVICE qUAlITy 41

TrustwouldneedtobeattheheartofasystematicserviceCImodel,whichemergesovertimeandisbuiltonthefoundationsofsuccesses,evidenceofwhich may include:

• positivesupportandfeedbackofprior customers/clients

• positivesupportfromcompanyexecutives

• economicvalueachievedforthebusiness

• effectivelymeetingtheagreedbusinessandserviceobjectives,everytime

• properly‘followingup’(frontandbackend)toassureand communicate that expectations are being met.

Supportingthiswitheffectiveperformancemeasurementframeworkswillensurethatbothcustomersandsuppliershaveamutualincentiveforsuccess,andwaysofevidencingit.Transparencycanassistthis–forexample,grantingclientsawindow into supplier data tracking and reporting tools will helpsupportanopenpartnership.Assumingthatthemeasurementdataisrobust,thenbenchmarkingand CIcanbeapplied,notonlyoftheservicebutoftheinformationtoo.Consumerswhobecomeconsciousofthe service quality can also assist with discussions on serviceleveladjustmentsandperhapswiderVFMtoo.

EvidencingtheVFMchallengecouldbehandledthroughadvancedcustomerrelationshipmanagement(CRM),whichcouldbeusedtoprovidedoptionsandcontrolforthebusinesstoselectthelevelofVFMwhichbestworksforthem,andforimplementingcreativesolutionstoimprove on the baseline.

Asaserviceindustrythereisadependencyonthequalityofresourcesaswellasprocessesandthisneedstobeunderstoodandimproved.Inparticularattheheartofservicequalityimprovementtherewillalwaysbepeople.Employingtherightpeopleforthejobwillremain key to guaranteeing service delivery to the

satisfactionofcustomersandconsumersday-in-day-out.Inthisregarditwassuggestedthattheapproachtomanagementcouldchangeforthebetter–ratherthantellingsomeonewhattodo,tellthemonlywhattoachieve.Thisallowsfreedomtoinnovatetofindthemosteffectivewaytoachieveresults,andoffersthepotentialforbetterservicequality.Byidentifyingandreinforcingthebehavioursthatdefineandinformthequalityyouwant,CIcanbeachieved.

Afinalconsiderationforservicequalitywastoincludethe consumer in reviews and even perhaps the supplier selection process – let them know that their input is valuable,andaskthemtoinformtheCRE&FMteamwhen they experience above or below standard service. Insupportofthis,theCRE&FMteamneedstorespondtoallcomments,questions,andproblemspromptly.Itisconsidered important to address problems when they happenratherthanwaitfor,say,quarterlyservicereviews.

Themoderator’sopeningquestion,“Whyisanythinglessthan100%servicedeliveryacceptable?”remainedtheunanswered‘elephantinthevirtualroom’.

Service quality is considered in different ways by the various stakeholders

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42 12 INTEllIGENT ClIENT

12 Intelligent ClientBy John Hinks, with Joseph Pereira and Scott Klesius

The question:WhatarethecharacteristicsofamodernCREorganisationthatissuccessfulataligningwithboththeenterpriseandsuppliers?

The context:CREorganisationalstructurestendtovaryintheirprimaryalignmentbetweenfunctionandgeography,with some being a matrix between the two. Adiminishingnumberhavebusinessalignmentasthemajorfocus.Butaretheseoften-reportedcharacteristicsthe most important when considering how best tostructureandresourceaninternalCREteam? Whatotherfactorsareimportantandlikelytolead tosuccessfuloperationswithsuppliersandstrategicalignmentwiththeenterprise?

The response:Thebodyofdiscussiononthistopicwasfounded onadefinitionoftheIntelligentClientbasedaround a partnership model and in achieving true business alignment.Inpractice,whilstthishasbeenanaspirationforalongtime,itisrarelymanifestedinCRE&FMorganisations.Somehavedevelopedtheconcept,butmost are still assimilating why their existing operating modelsareunsuitable.Thereappeartobeseveralfactorsatplayincluding:

• theskillsetandmindsetoftheCRE&FMprofession,whichstilltendstoreflectitsbuilding-centriclegacyratherthanitsbusinessproductivity-centricpotential.

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Theselegacybehavioursappearthroughtherelationshipwiththebusiness(businessmakesthedecisions,CRE&FMexecutes),theoperationalways ofworking(CRE&FMremainsacostcentre/supportfunction),andareechoedbyanapproachtoperformancereportingwhichremainsunsuited forillustratingCRE&FMvaluetostakeholders

• organisationaldynamicsalsotendtocompound thesedifficulties–forexample,theseparationofaspectsoftheCRE&FMrolessuchasprocurement,suppliermanagement,relationshipmanagement, andperformancemanagementcanfrustrateattemptstooperateanintegrated,strategicandIntelligentClientapproach.

Partlyfortheabovereasons,truepartnershiparrangementsremainelusive,andstrategicalignmentwiththebusinessremainsachallenge,notleastbecauseofthecommonplacebusinessperception oftheroleofCRE&FM.

WheretheIntelligentClientmodelisoperatingthereseemstobeaprerequisiteofanexcellentgovernanceregime,preparedandsharedwiththeenterpriseandwithsuppliers.Thisensuresthatdecision-makingisoperatingattheappropriatelevel(s)andtheprocessescontrolling tactical operations are strong and consistent. Thislevelofcontrol(inessence,ahighlevelofcapabilitymaturity)freestheIntelligentClienttofocusonthinkingabout what will better benefit the enterprise (strategicallyandoperationally).

Whilstanincreasing(ratherthandiminishing)number ofclientsarestrivingtoachievebusinessalignmentastheirprimaryfocus,itisobservedthatmostIntelligentClientsseemtoemergefromthenon-CRE&FMparts oftheircompanies.Forexample,theCFOorganisation,orproduction/operations.TheseIntelligentClientsareprimarily seeking assistance in communicating corporate imperativestotheirCRE&FMsuppliers,and/orintranslating real estate issues into terms that their counterparts(outsidetherealestateorganisation) can understand.

The future – changes in perspectiveVirtuallyeveryCRE&FMprojectnowisinterdisciplinary,andtheroleoftheIntelligentClientwillbetoassembleandcatalysemulti-facetedandcross-border/cross-organisational networks to combine their strengths and attainsynergy.Distancereallyisdead.Atallthreelevelsofnetwork(thepersonal,theorganisational,andtheecosysteminwhichtheorganisationlives)tomorrow’sIntelligentClientswillusethetechnologyattheirfingertipstopromoteandutiliseglobalnetworks.Socialmedia will be used to strengthen existing networks as wellastostimulatenewnetworksandfosterinnovation.Collaborationsitesandcommunicationserviceswillbeusedtoenablenetworksthatencircletheglobe,andtoenhance personal and organisational networks with new channelsforinformationflowforlistening,forfeedbackandforjointideation.Thetechnologyisavailable,theapplicationwillbethekeyadvancement,whichwillinturndifferentiatetheIntelligentClient.

Throughpartnershipmodelsfocusedonachievingtruebusinessalignment,theIntelligentClientwilloperateaside-by-sideplanningprocesswiththebusinessandactas intermediary with supplier partners to translate the understandingofstakeholdersintoatargetedandintegratedsupportservice.Anadaptivemanagementmodel will support the partnership.

AkeydifferentiatoroftheIntelligentClientwillbestrategicthinking,includinglong-rangehorizonscanningunderpinned by controlled and consistent processes. Overandaboveone-,three-orfive-yearprojections,horizonscanningwillbelookingat10-or20-yearwhat-ifprojections,probablyusingscenarios.CRE&FMwillbereinterpretingtheselong-rangepossibilitiesonaregularbasis,protectingtheleveloflatentflexibilitywithinnearer-termplanssothatchangestothebusinessplatformorbusinessoperatingmodelcanbeaccommodated.Innovationopportunitieswillfeatureheretoo.ThesedevelopmentswillallowCRE&FMtocontributemeaningfullytoaspectsofbusinessstrategydevelopment,especiallywhat-ifmodelling,ratherthansimply aligning.

The journey – howEffectivechangemanagementwillbekeyformanyorganisations,aswillmanagingthechangeintherequiredskillsetoftheIntelligentClient.TodothisCRE&FMwillneedtoevolvetobecomeafunctionthathas the business mindset and management skills required

The Intelligent Client will take the lead as a change agent

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totrulyunderstandtheirstakeholders.Inordertodothissystematically(andtoconsolidatetheadvances)atightgovernancemodelwillbeessential.Thismustspancomplexpartnerships.CompaniesthatwishtoevolvetheirdeliverymodelsothattheirCRE&FMteamisfree to(re-skilland)re-focusonmanagingtherelationshipwith the business stakeholders will probably do so by outsourcing,probablywithinpartnerships(perhapsthetermandconceptofoutsourcingwillevolvetoo?).

SeveralviewswereexpressedaboutthepurposeoftheIntelligentClient.Shoulditbe‘successfuloperationswithinternalclients’and‘strategicandoperationalalignmentwiththeenterprise’?Inthiscasebusinessalignmentwouldofcoursebethepriority,andsubsidiaryfactorswouldneedtobehostmanship,servant-leadership,anentrepreneurialattitudeandonline-serviceprovision.OralternativelyshouldCRE&FMapproach outsourcing via a partnership as the means to delegatethetacticalactivities,therebycreatingtheheadroomrequiredtore-defineCRE&FMskillsandtoevolve into the strategic and intelligent business partner who(likethebusiness)isassessedonoutcomes?Thisoutcomeiscontingentuponchangingtheskillset(andmindset)ofCRE&FMhowever,forinstancebyre-trainingclientrelationshipmanagersforbusinesscompetencies.

ClearlytheextenttowhichthemanifestationoftheIntelligentClientattainstheseaimsdependsonthecapabilitymaturityofeachorganisation,notleastitsabilitytoalignCREwiththebusiness,andtoproportionitseffortsaccordingtotherelativeurgenciesofchangeandcomplexitywithinthebusinessandtheglobalCREmarketplace.Thesetooareconstantlyevolving,sotheIntelligentClientmustbeapproachedasawayoftravelling rather than a destination or some simple changeofstatus.Thisjourneywillmostlikelyhavetostartbyfosteringsuppliercollaborationinsteadoffilteringbycompetition,notleasttomaximisetheoptionsandmakethemostofthemanygreatminds outintheindustry,aswellastocontinuallyrechargeandrefreshtheirculture.ConsolidatingthemandatefortheIntelligentClientwithinthecorebusinesswillneedevangelicalleadership.TheCREexecutiveneedsto taketheleadasthechange-agent,takingoverallresponsibilityforcompletefunctiondeliverytothe ‘Csuite’.Professionalsinthisareawillneedtobe moreawareof,andtrainedin,changemanagementtechniquesandtools,andbebetterpreparedtoimplementthem.Bydoingthissuccessfullyandactivelymanagingprojectsthe‘Csuite’andbusinessasawholeshould start to take notice.

Adaptivenesswillbeakeysurvivalfeatureofthe trulyIntelligentClient.Thiswillhingeupondynamiccapability,inparticulartoensurethatCRE&FMhas theknowledge,insightandskillstorespondtoitsbusinessneeds.Furthermore,itwillrequireanewlevelofconfidencewithchallengingandsupportingthebusiness in achieving competitive advantage and differentiatedservice.Aswasdiscussedinthepartneringtopic(section6),itwillalsorequireacomfortwithbeingchallengedconstructively,too.

Thewell-definedandevidencedcharacteristicsofhigh-performingteamsarelikelytobemanifestintheIntelligentClientworkinginpartnershipwithsuppliersand aligned with the business:

• Thequalityofforwardplanning.

• Theuseofanalytics.

• Theappropriatenessoftheorganisationalmodeladopted.

• Thequalityofinternalcustomerrelationships.

AchievingthefunctionalexcellencerequiredtounderpinandsustainthiswillrequireCRE&FMdepartmentstomeasurethemselvesinalltheseareas,anddevelopcontinuous improvement programmes which will add value to their business.

Finally,behaviouristhoughttobeakeydifferentiatoroftheIntelligentClient–trustintheirsuppliers(implicitlythey will have the skills to develop partnerships with the bestsuppliers),andgettingtheminvolvedincomingupwithsolutionsratherthanjustrespondingtopredefinedtasks.Thiswillalsocreateaconduciveenvironmentforinnovation.TherehavebeendocumentedexamplesoftheIntelligentClientmodeloperatingonaprojectbasis,forexamplethemid1990screationoftheInterpolisOfficeConceptwhichbroughttogethercollaboratorstoco-createundera‘curator’(seeSpacetoWork:NewOfficeDesignbyJeremyMyersonandPhilipRoss).

Adaptiveness will be a key survival feature of the truly Intelligent Client

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13 InnovationBy John Hinks with Ian White

The question:HowcantheCREindustrybecomemoreinnovative?

The context:TheCREindustryoftenboastsaboutbeinginnovative,butinrealityitrarelyis.Alotofwhatittalksaboutisreallycontinuousimprovement(improvingtheexistingwayofdoingthings).Areflectiononthenegligibleamountofmoneythatisspentbyindividualfirms–andindeed collectively as an industry – on seeking new knowledgeandresearchmayhelptoexplainthis(atleastinpart)?However,thesedaysbusinessesandindustrieswhichdonotinnovatedonotsurviveforlong!SowhatcantheCREindustrydotochangethisreputationandbecomefarmoredynamicandinnovative?

The response:InnovationhasbecomeafundamentalimperativeforCRE&FM.ThepressuretoinnovateisrisingasitbecomeseverclearerthattheindustryandthebasicCRE&FMvaluepropositionarebothatriskofflat-lining.

Thecontributorsnotedthat,historically,anumberofforceshavemitigatedagainstinnovationinCRE&FM.AviciouscircleofprescriptiveRequestsForProposal(RFPs)andinput-basedServiceLevelAgreements(SLAs)havekepttheemphasisoncompetitiveness-via-costratherthanviadifferentiation.Compoundedbythelackof

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evidenceofthelinkbetweenhigherinvestmentinsupportservicesandbusinessvalue-add,thetwinforcesofintrospectivemetricsandtheimperativetomaintaincost-incomeratiosunderrecessionarypressurehaveresultedinacommoditisationacrossCRE&FMservices.Finally,theaccompanyinghistoryofunder-investmentinimprovingaveryweakR&DbasehaslefttheindustryfacingwhatlookslikeatextbookcaseofwhatClaytonChristensennamed“theinnovator’sdilemma”:howtosimultaneouslydowhatisrightforthenear-termhealthofanestablishedbusinesswhilstfocusingadequateresourcestoavoiditbeingblind-sidedbythedisruptivetechnologiesthatultimatelycouldleadtoitsdownfall.

ThepressuresofdisruptivetechnologiesareindisputablyatCRE&FM’sdoor.Flexibleworkinghasreducedtheneedforconventionalrealestate,atrendwhichlooksirreversible.Whatstartedastheglobalisationofthebackofficeinpursuitofcost-sideefficiencyhasevolvedintothedisplacementofthefrontoffice.Establishedbusinessesseekingtorefocustheirresourcesontheemergingorre-floatingmarketsfaceatriplewhammyofshiftinginternalinvestmentpriorities,adepressedrealestatemarketfacingrefinancingtensions,andtheoverheadburdenofphysicalassetscomparedwithagilenewbusinessmodels.Thishaswrong-footedallmannerofCREarrangementsalongsideallmannerofcorebusinessmodelsandnotjustthosethattradethroughtheirspace.Atoxicmixofenergycosts,changesinfinancialreporting,plussustainability-relatedpressureshavecreatedaperfectstormforbusinessesrunningextensive,excessive,and/orinefficientportfolios.Meanwhile,secondandthirdgenerationoutsourcingtoan already commoditised industry is threatening many clients’abilitytoadapttothenewmodelsofbusinessagility and reverse/reshape the chronic service erosion. Futhermore,communicationstechnologiesandprocessautomationarefundamentallyaffectingthebusinessrequirementsoftheirfront-andback-officeworkplaces.

Theviewofcontributorswasthatwhilstthepromotionofinnovationandinnovativenesshaveoftenbeendiscussed,innovationhasrarelybeenmanagedeffectivelywithinCRE&FM,butnowisthetimeitneedstobe.

What next?So,accordingtotheclassicterminologyofinnovation,CRE&FMhasits‘burningplatform’.Howshouldweapproachtheinnovationchallenge?Anumberofkeyissues were discussed…

Disruptiveinnovationusuallymakestheheadlinesandsometimesitcreateswholenewmarketsectors,howeverevenaseriesofsmallevolutionaryinnovativefeaturescanrevolutioniseanexistingsolution.Arguablyit has been the progressive adaptation and building upon technologies and their potential use that has allowedthecurrentproblemsituationtoevolve.Indeed,whenacombinationofsmallinnovationscollectivelysupportamoreprofoundchangetheirimpactcanbecomesynergistic,andthiswassuggestedasbeingwhathashappenedwithCRE&FM.Ontheotherhand,thisalsomeansthatCRE&FMisperfectlyplacedfortheintegrator’srole.Asonecontributornoted,opportunityandpressurecoexisthere.ThechallengeforCRE&FMisto figure out how to address this.

Onesuggestionwastoshiftthefocusfromthefacilityitselftoitsroleaspartofaproductionplatform;thencetomanagetheproductivityofthatproductionplatformasasystem.Thisnewparadigm,embodyingnewconceptsofvalueandservice,newconceptsoftheroleoftheworkplace,andnewformsofserviceintegrationand business alignment was thought to be readily within thegraspofCRE&FM.Conceptually,itislittlemorethantheintegrationoflotsofsmallevolutionaryinnovations,whichhasbeenachievedbeforeinmanyindustries.Accordinglyitwasnotedthatthe‘glasshalf-full’viewpointisthatCRE&FMasawholesitsamongstacollectionofthecomponentsthatarerequiredforastep-changeinnovation;allthatisneededtorealisethisisto,well,realiseit.

Thediscussionnotedthatinnovationdoesn’t‘justhappen’.Itneedssomekindofprocesstoachievethechange and to generate and sustain momentum. ContributionssetoutwhatCRE&FMneedstodo:

• Thebedrockisaradicalchangeofmindset:

– Foronecollaboratorthiswouldbere-imaginingCRE&FMasaprofitcentreratherthanacostcentre.

– AnothersuggestedthatwethinkofCRE&FMnotintermsofbricksandmortar,buildingsandfacilitiesmanagement,butintermsofportable,corporatevettedservicesavailableanytime,anywheretosatisfytheemergingneedsofthemobileandvirtualworkforce.

Innovation has to be nurtured and rewarded

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– AthirdsuggestionwasthatsinceCRE&FMfindsitsrootinfinancialtheoryandassetmanagement,itsfocusismainlyonportfoliooptimisationandfinancialreturn.Playingtothosestrengths,weshould apply the same thinking to our core business,rethinkinghowtoimproveCRE&FMsothat the financial return/contribution it makes via its activities to the wider business is maximised.

– ItwasalsoproposedthatCRE&FMshouldintegratethethreeleversofinnovationthatitisexpert at controlling in order to generate innovativebusinessmodels–namelylowercosts,enablingtechnologies,andvaluenetworks.

• Itwasgenerallyagreedthatanewfocusisneededon how to practically stimulate and accommodate innovation,notjustculturallybutmatchedbyarethinkingoftheunderpinningcontracts,probablyviapartnerships.Thiswouldmakelonger-termthinkingmoretenable,especiallymovingtowardscommittingtosharedrisksinpursuitofsharedgoalsandbenefits.InessenceitwasarguedthattheCRE&FMindustryneedstostartplaying‘theprisoners’dilemma’withawin-winratherthanzero-sumattitude.Severalcontributorsreflectedontheurgencyforinnovationincontractsinorderto createtheplatformrequiredinserviceoutcomes andco-operative/integrativemodels,arguingthat arethinkoncontractsshouldfocusonmakingparticipation in innovation integral to the service delivery and reward.

• Itwasobservedthattherewillusuallyneedtobeacatalystforinnovation,andespeciallythatanexternalchangecanoftenstimulateitasaresponse.Theexampleofcorporateentryintocomplexoremergingmarkets was cited – suddenly there is no longer a simple global distinction between mature and emergingmarkets,andcorporationsneedtobeabletoassimilateandadapttoawiderangeofpolitical,legalandculturaldifferencesinordertosupportavarietyofgovernanceandbusinessprocesses.Thisabsolutely requires innovation.

• Itwasnotedthatpartofthesolutionliesincreatingaforumwhichencouragesallstakeholdersfromdifferingpartsoftheindustrytogetinvolved,particularlysuppliers.Itwasarguedthatifthey(thestakeholders)believethereisgenuineopportunityforco-operation,andiftheyclearlyunderstandthevision(s)ofthehostorganisationthentheywillparticipateandbecome‘partners’inthechangeprocessratherthancarryingjustthe‘supplierdelivery’mentality.

• Weneedtotravelboldly,inparticulartorecognisethatnoteveryinnovationwillsucceedorevenreflectitsoriginalform–sotoleranceandpatiencearecrucial. One contributor suggested that innovation shouldbefundedthroughaseparatebudgetinrecognitionthatthe‘payback’isoftenlongerthanthefinancialyear.Othersproposedacross-industrycooperation to achieve a change in the industry as a whole.TheexampleofCable&Wirelesswasalsocited–aformalinnovationprogrambasedaroundacompetitionandthesharingofideasbothbigandsmall.Itwasalsoobservedthatwhilstsomeofthe300+entriestheyreceivedwereleapsforward,somejusthelpedteamsperformbetterwithout‘rethinkingthewheel’.

• Abroadscopeisimportantintermsofwhatconstitutesaninnovation.Itwasnotedthatinnovationtakesmanyforms–evolutionnary,organic,disruptive–andasCRE&FMstrivestoanticipate,satisfyandexceedcustomerneeds,soalltypesofinnovationareutilised.Thisappliestoboththeclient-sideandthesupplier-side.

• Itwasalsonotedhowlongevenadisruptiveinnovationcantaketomakeanimpact.Forinstance,CRE&FMhavebeenlivingwithvariousphasesofthe‘alternativeworkplace’foracoupleofdecadesnow,yetonlyrecentlyhastheconvergenceofallthecontributory minor changes and technologies synergisedtoproduceatrulytransformationalimpact–perhapsatlasttheepitomeof‘anideawhosetimehascome’.

• Therewasanextendeddiscussiononhowtogetinnovationtothesurfaceinanorganisation.Theviewemergedthatbecause,ultimately,innovationisapeople‘thing’,theCRE&FMindustryhastoemploypeoplewhoareunafraidofsteppingoutoftheboxandwhoareabletopromotethevirtuesoflateralthinking.

• Innovationhastobenurturedandrewarded, sothecultureandenvironmentmustfosterthis wayofthinking.Theneedtorecognisetheimportanceofinnovativenesswasalsonotedhere,sinceorganisationsarecollectionsofpeople,andwhilstyoucanenableandfosterthepossibilityforpeopletoinnovate,youcannotmaketheminnovate.Hencetheartofmanaginginnovationisn’tsomuchabout making organisations more innovative as about nurturing an organisational setting that enables and fostersthepossibilityforinnovationtooccur(commonlyreferredtoasincubation).Itwasnotedthat this includes creating an environment where

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peoplefeelsafetoinnovateandsharetheirideas,especially since the people who come up with an ideadon’talwayshavetheskillstotakeitforward.

• Itwasobservedthatusuallythemostdifficultaspectismanagingtheinnovationprocesseffectively.Itwassuggested that looking at the synergies between TotalQualityManagementandinnovationmighthelpthedevelopmentofanappropriateintegratedmanagement system.

• Afurtherandcrucialaspecttoconsiderishowideasaredispersed,adoptedandreplicated,especiallywheresharedinputsandintellectualproperty(IP)arrangements are involved.

• Topreserveanynewfoundinnovativeness,CRE&FMwillneedacultureofopencommunicationandconstantreflectionandquestioning.Thisposesachallengeforclientsandsuppliersalike,soit’sprobablybesttotackleittogether.Somehow,allofthe interests have to be properly aligned or at least mutually tenable.

• Whilstthepossibilityofdisruptiveinnovationisalwaysthere,incrementalandcooperativeinnovationwill only prosper when the current contractual and procurementbarriersareremoved(whichbrought thediscussionfullcircletotheneedtoresolvethecontractuallogjam).Severalapproachestotacklingthis were suggested:

1) AttheIndustrylevel:establishajointresearchcentre(possiblythroughthecurrentindustrybodiesandthemajoruniversities),withmajorindustryfunding.Thiswillbeatoughcallfortheindustry,givenitstrackrecordsofar,butitwasnotedthatithasbeensuccessfulinotherindustriesandthereareexamplesofopeninnovationprogrammeswhere industry players and suppliers have shown themselveswillingandcapableofopeningtheirR&Dlabsformutualbenefit(s).

2) Attheorganisationallevel:supportbycorporations(andprocurement)bybuildinginnovation-relatedKPIsintomajorcontracts,ideallyalsoofferingadditionalfundingformeetingthese.Along-termarrangementbasedonaclearunderstandingofhowanyIPmightbehandledisessential,plusmutually-agreedKPIswhichprotectaspectrumofshort-term,slow-burn,sustaining,anddisruptiveinnovations.

3) Attheproviderlevel:aninnovationculturewithmultipleinnovationsources,aprocessforvettingideasanddecidingwhichonestofund,andmultiplevehiclesfordisseminatinginnovativeideas/bestpracticestoclients.Anexamplewaspresentedofaprovidertakinganopeninnovationapproachwhichincludedarollingprogrammeofspecialised,customer-focusedeventsallaroundtheworld.Throughthesecustomersgottosee‘behindthecurtain’butmoreimportantlyinfluencedtheinnovationpipeline.Bothproviderandclientgainedvalue.Theprovidersgainedexposuretofutureclientplanningandbecamejointstakeholdersinfutureproducts.Theyalsogainedthebenefitsofworkingonprototypesinareasthatreallymatteredtocustomers.Thecustomersachievedfirst-adopteradvantages. Itwasnotedthatmorethan85%oftheideasproposed at these events made it through the product pipeline.

Under-investment and a very weak R&D base are amongst a number of reasons mitigating against innovation

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14 Attracting talentBy John Hinks, with Wendy Moreno and Fran Tomaselli

The question:HowcantheCREindustryattractfarmoretalent?

The context:FormanyyearstheCREindustryhasperceivedashortageof‘talent’.Whatneedstochangetoaddressthisproblem?Somewhatuniquely,oureducationprocesstrainsspecialistsfromtheoutsetratherthangeneralists who can then subsequently specialise –doesthisserveuswell?Asanindustrydowe promote ourselves properly to people at their key careerdecisionpoints?

The response:Attracting,catching,holdinganddevelopingtalent areallproblematicforCRE&FM.Asignificantamount ofindustrytalentjoinsby‘happyaccident’throughroutessuchasengineering,construction,foodservicesor cleaning.

Reticenceinunderstandingandmeasuring‘highpotential’talent in any other way than through qualified specialism oroperationalexcellencemeansthatwefailtomakebestuseofthetalentavailabletous.WetendtolookforindividualswithdirectCRE&FMexperiencethinkingthatthis is the only route to success. Focusing on this single competency means that we progressively narrow our pool ofpotentialtalent.ThosewhoholdexecutivepositionstendtostaywithintheCRE&FMrealm,whichimpedes theattractionoffurthertalent,andhindersvisibilityofCRE&FMacrossotherareas.

Acrosstheglobefull-timeundergraduatefirst-degreeprogrammes and graduate/internship programmes are rare,andwemarketCRE&FMpoorlytoschool/students.

Clearlythough,wewillneeddifferenttypesoftalent astheCRE&FMrolesbroaden,deepen,andbecomemore complex.

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The journeyWeneedtogetbetteratprotectingwhatwehave.Weneedtobemoresystematicaboutidentifying,nurturing,usingandrewardingtalent,andnotfeelingthreatened byit.DefinedCRE&FMcareerpaths(linkedtostructuredlearning)wouldhelp.Wealsoneedtorefreshwhatwedohave.Ensuringaccesstoalternateviewpointsandexperienceisacrucialissueforanyindustry,otherwiseitrisksbecominginsularandconservative,whichleadstoprocess-basedthinkingandtheperpetuationofthestatusquo.Keepingthingsfreshisassimpleasensuringthatpeople who are employed have the aptitude and desire ratherthanvastamountsofexperienceintherole.

Weshouldconsiderchangingthetargetfornewtalent,andtheapproach.Asourroleexpandsandweneedtoembracenewservices,abroaderrangeofprofessionalswho to date have had no or only tangential roles within our industry will become relevant:

• Asbuildingsbecomeincreasinglysophisticatedandtechnologicallycomplex,theindustrywillneedtoaddress the new challenges in maintaining and managing them adequately.

• As‘people+technology+services’becomesmoreimportantthanplace,whatchallengesdoesthatposefortheCRE&FMskillset?

• Asthephysicalspacebecomesseenasastrategictool then the roles and positions will be seen as a strategicpartnerandwillhopefullyattractamorediverse talent pool.

Theroleandthemarketarebothchanging,and so must we.

Theindustrycouldstartbylookingmorewidelyandcreativelyatpullinginexistingtalentfromelsewhere tobroadenitsprofileofcapabilitiesandoutlooks – many leading organisations are targeting recruitment athigh-performingindividualswithqualificationsin coresubjectssuchasphysicsthatdevelopquestioningmindsandexcellenceinareassuchasdecision-making,rather than the conventional specialist industry specific qualifications.

Aswellaspursuingabroaderprofile,theindustryshouldalsobedevelopingrelevantofferingswithinarangeofbusiness-themedschoolsandothercollege/universitytracks.Inparticular,ifwewanttostep-changeourrelationship with business and business strategy then we needtoengagewithbusinessschoolstogetpeoplefromdiverse backgrounds and educations to understand the roleofCRE&FMinbusinesseffectiveness.ThroughthiswemightalsoattractsomeofthemintotheCRE&FM

arena.Acorrespondingsuiteofundergraduateinternshipsand graduate/postgraduate placement schemes with proper attention to mentoring would be a good step forwardtoo.Todealwiththeincreasingsophisticationofbuildingsystems,weneedtothinkaboutthebreadthoftheCRE&FMfieldaswellasitsdepth–soweshouldalsolookto,say,theIT/Techmarketplacetodevelopourbaseofspecialistknow-how.

Anotheropportunityistotargetpotentialnewtalentfarearlier.AsanindustryweneedtofocusondrivingthevisibilityofCRE&FMasaschool-levelcareerchoicewithclearroutesofentry.SchooloutreachwouldalsobepowerfulinincreasingawarenessaboutcareeroptionswithintheCRE&FMindustry.Wealsoneedtothinkdifferentlyaboutfuturetalent.‘Millennials’thinkdifferently,theyhavedifferentprofilesofinterestanddrivers,andtheyhavegreaterworkplacetechnologyexpectationstoo.Seekingtoattractthemthrougha‘baby-boomer’mindsetisunlikelytobesuccessful.

For both existing and new potential we need a marketing campaign that highlights our industry and the vast numberandvarietyofopportunitiesthatexistwithinit.Atthesametimeweneedtothinkaboutourprofile, too – attracting better talent requires a workplace that encourageshighproductivityandknowledgetransfer,abona-fidecorporatesocialresponsibility(CSR)reputation,commitmenttosustainabilityandpersonalgrowth,acommitment to wellness and a management style that empowerspeople.Thisisachievableifwemakethecommitmenttolearn,changeourthinking,andthen funditproperly.Thisiscrucial.Ifanyonecomponentismissing,topperformerswillmorelikelyleaveandfindthepride they seek in their work and its outcomes elsewhere.

Wealsoneedtorecognisethattalentcrossesages,gender,culturesandlocations.Companieshavetotrulyofferflexibilitytotheiremployeesiftheywanttosatisfytheirdiverseneeds.Thismeansflexibilitywithwhenworkisdone,whereitisdone,andevenhowitiscompensatedfor(childcare,healthbenefits,vacation,timetostudy,salary,stock...).Prioritiesofindividualschangeovertimeandindifferentpartsoftheworldandtobuildemployeeloyalty,companieshavetoshowthattheytrustthemandunderstandtheirdifferentpreferences.

The industry needs to think differently about future talent

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15 RISK 51

The context:CREriskisoftenonlylookedatandaddressedin thecontextoffinancial/budgetaryriskandfacilitycomplexityandavailability,withoutnecessarilyconsideringthefullextentoftherisktotheenterpriseanditsoperations.Forexample,doesCREhaveacompleteunderstandingoftherealoperationalrisksand

15 RiskBy John Hinks, with Beth Winterland and Mike Watts

The question:WhatisthetrueandfullextentoftherisksthatCREmanages?

consequencesoffailureforthevariousprocessesbeingperformedbythebusinessintheworkplace?Howcanprocessqualitybemeasuredandconsideredaspartofdetermininganacceptableorganisationriskprofile?Howcanagilityandflexibility(theabilitytorespond inatimelymannertodemandchanges)beaccuratelyfactoredintorisk-baseddecisions?

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The response:Riskisinherentinallbusinesses.Howmuchriskacompanycanandispreparedtotake,andhowitismanaged,arekeyissues.ItiscrucialforCRE&FMtounderstandthebusinessappetiteandcapacityforrisk in order to be able to design and manage the service resilience accordingly.

WhilsttheHeadofRiskforanorganisationwillbecharged with enterprise level aggregation and mitigation ofrisk,riskmanagementhasalltoooftenbeensiloed.CRE&FMprofessionalstypicallythinkaboutoperationalriskandbusinesscontinuitywithinthecontextoftheirdisciplinealone.Riskisbroaderthanthis.ForexampleintheCRE&FMcontext,whilstlandlordperformanceandleaseclausessuchasnon-disturbanceandsubordinationmatter,itiscrucialtoalsoconsiderfinancialrisk.Forinstance,howdoweidentifyandhandletheaggregateeffectofasuiteofrealestate-relatedrisks?

Otherdimensionsofoperationalriskmanagementinterfacewithcontractualriskmanagement(includingsupplier/supplychainrisks),informationrisk,ITrisk,andbusiness continuity.

Whilstanorganisationmayhaveappropriateprocessesandproceduresinplace,attitudeiscrucial.Takingabottom-upperspective,itisimportantforprojectteamstointegrateriskidentification,analysis,mitigation,trackingandcontrolintonormalmanagementactivities.Consideringthefourmajorcomponentsofriskmanagement(identification,assessment,response,andcontrol)willallowtheprioritisationofissuesonthebasisofprobabilityandmagnitudeofimpact,whichwillcreateastartingpointforthebusiness,CRE&FMclientandsupplierstoco-developmitigationstrategiesforeachissue.

Akeyfactorofmanagingriskisbeingabletoevaluateit.Theemergenceofcommonriskmanagementtools,risklanguageandmethodologyattheasset/property,national,regional,andportfoliolevelishelpingthistodevelop.Evenrelativelysimpleassessmenttools,whenusedconsistently,canbeavehicletoilluminateandaggregate key risk exposures on a consistent basis.

Quantifying(orestimating)riskswillusuallybedonebyconsideringthelikelihoodandtheimpactofeachrisk.Impactshouldbethoughtaboutintermsofvulnerabilityand consequence. Operational risks to business operationsarisewhenconsequence,vulnerabilityandthreatco-exist–thinkinginthesetermsopensupmultiplefacetstomanagingriskviacombinationsofavoidance,mitigationtactics,andrecovery/resilienceaccordingtobusinessappetite.Arobustriskregisterprocess can help support this.

Beyond appropriate processes and procedures, attitude is crucial

Business appetite and capacity for risk has to be understood

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16 GlobalisationBy John Hinks, with lars luettich, Anja Griesinger and Frederic Wieden

The question:WhatvalueshouldCREbegeneratingfromglobalisation?

The context:TheCREindustryhasbeenincreasingthescaleofitsgeographiccoverageformanyyears.Anumberofserviceproviderscannowjustifiablyclaimtobeabletoofferservicesinmostifnotallindustrialisedcountriesoftheworld,andalotoftheCREteamtheyworkwith

have a similarly global dimension to their strategies and operations.Butisthismerelydoingwhathasalwaysbeendonelocally,onalargerscale?Whatadditionalbenefits does this currently bring to the industry and its stakeholders?Whatnewopportunitiesdoesglobalisationbring?Whatmoreshoulditbedelivering?

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The response:Muchofthediscussiononthistopiccentredaround the tension between global standardisation and local deliveryandcustomerexpectations.CRE&FMmayhaveevolvedfromlocaltoregionaltoglobalisedlevels,bundlingserviceofferingstoreflectglobalprocurementpolicy,economiesofscaleandchangesinconsumer/businessneeds;buthow/shouldlocalbusiness,cultureand identity be preserved whilst servicing global structuresandgoals?

GlobalisationhasundoubtedlybeenoneofthekeydriversofchangewithintheCRE&FMindustry.Ascorporations undertake business on an increasingly globalbasistheyrequireinfrastructurepartnerswith the geographic capability to support core business activityatthislevel.OverthisperiodtheCRE&FMindustry has responded to this challenge through industryconsolidationandplatforminvestmentstargeted at true global organisation and service provision.However,thecustomerexperience(andthusthecustomersatisfaction)iscreatedlocally,witheachcustomer contact and each transaction. Hence a sympathetic balance between global ideas and standards and local conditions and particularities remainsessential.ForthepastthreedecadesEuropeancompaniesinparticularhaveallowedawiderangeofautonomyforlocalcostcentremanagers(mergerandacquisitionmodelshaveoftenbeenbuiltonthis).ThemovetoaconsistentCRE&FMmodelgloballyrequiresnotonlyadeepunderstandingofthecompanyculturebutequallyaglobalcross-culturalintellect,sinceiftheglobalisingofserviceplatformsisappliedtoofar,sayasanefficiency-of-deliveryorcost-controlchallenge(thehistoricalcornerstoneofCRE&FM),thencustomerexperiencecouldsuffer.Withinthisdynamicliesaquestion over when and how to use a single global supplierversusmultiple(local)suppliers.

Theexchangeofskillsandbestpracticethroughouttheworldwereacknowledgedasabigpotentialgainfromglobalisation.Butthisviewwasnotwithoutdoubts–doglobalisation’sbenefitsevadeusduetolocally,culturally,politically-complexsystems,leavingussimplydeliveringfragmentedservicesonalargescale?

The future of globalisation and CRE&FMAdvancedbusinesswillbeoperatingatrulyglobalpresence,probablyofferingthesamenatureofservice,processcontrol,invoicingandreportingeverywhereandprobablymanagingjustonesupplierinsteadofmultiplesuppliers,butretainingthelocaltouchviadedicatedlocalteamswhoadjustthefinaldeliveryofservicestolocalcompliance requirements and cultural expectations. Globally,ourindustrywillalignportfolioswithmarkettrends,leveragebuyingpower,managedemandcyclesandcapitaliseonqualifiedlow-costrealestateskillsandlabour.Thiswillbeassistedbymarkettransparency,standardisationofmetrics,servicereportingconventionsandsharingofbestpracticesinamoreopen-sourcewaytobringmuchmorebalance.Transparentcomparabilityofcosts will operate at an international level via a consistent globalframework.Thedeliveryfocuswillshifttoservicingdiversity(outcomes-oriented)insteadofsimplyreliability(inputandmanagementprocessoriented).

Inthesearchfortheefficienciesthroughnon-stop workandtruecapacityutilisationlevelling,an innovativeglobalCRE&FMoperationwillhaveadoptedthe24x7modelofsoftwareengineeringtocreatesometime-basedratherthangeographicallybased roles–forexample,servicedesksanddatamanagement (e.g.3x8hourrollingservicehandoverswith globalcoverage).

The journey – how to generate value from globalisationViewsonhowtoproceedtendedtopolarise accordingtowhethertheparticipantsfavouredasinglesupplier/singleclientplatformoramultiplesupplier/localclientplatformapproach.Combiningthetwowasdiscussed extensively.

Throughtheglobalisationofindustriesandbrands itisinevitablethattheCRE&FMindustrywillbeprovidingmoreofthesame:consistencyoftheworkplace,systemsandprocesses,valueandcosttransparency.Asbusinessenablersweprovidetheinfrastructuretosupportgrowthandincreaseshareholdervalue.Wealsohavearesponsibilityandinfluencesocialeconomicaspects;ourindustryispart oftheprocessofincreasingpersonalwealth,ensuringhealthandsafety,offeringemploymentopportunitiesandcapturinganddevelopingtalent.Thisrequires

Globalisation has undoubtedly been a key driver of change

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service delivery solutions and governance structures that crossgeographicboundaries.ThecombinationofriskmitigationandglobalperformancemanagementcreatecompellingreasonstodeliverCRE&FMactivityonaglobal basis.

Asincreasedsuppliergeographicalcoverageandmaturity continues to drive standardisation and volumes ofoutsourcing,thispresentsanopportunitytodriveeconomiesofscaleandbestpracticeandlearningderivedfrommanagingalargerangeofcomparableclients.Thisfavoursthesinglesuppliermodelthroughglobalserviceplatforms.TheabilitytotrulyglobalisetheirestatesandtakeadvantageofthesebenefitswillbekeyforcorporateCRE&FMoperations.

Globalisationhasalreadymeantthatpeopleareloadingtheirdayarounddifferingtimezones–someonebasedintheUKhandlesAsiabusinessinthemorning,EuropeanduringthedayandNorthandSouthAmericaintheevening.Ifdonecorrectlyworkcanbedoneovernightandbereadyforthenextcontinentandtimezonetopickupinthemorning.Themainquestionishowtoworkmoreeffectivelyusingtechnologiesratherthansimplymoreefficiently.Witheffectivetechnologytoolsitshouldbepracticableandsensibleforbothacentralised and remote management team or intelligent clienttomanageaglobalportfolioglobally24/7withfewerresources,andlesstraveltoo.

Globalgovernanceiscrucialtopushthestandardisationnecessarytounderpinthischange,butthecontributorsfeltthatonlycertainfunctionswarrantglobaldirectivesandaglobalapproach,suchasinformationmanagement,recordsmanagement,anddataprotection.Itwasnotthoughtnecessaryordesirabletogloballystandardiseeverything.Itisessentialtoappreciatewherethekeyvaluedriversoriginate–locally,countrylevel,oroverallglobalconsistency–andoperateaccordingly.Itisessentialthattheseprioritiesaresetanddeliveredagainstabackdropofbothglobalandlocaltendencies,respectingthenuancesthatmattertotheworkforceandcustomers.Sinceoneofthefirstaspectsofanorganisation‘goingglobal’orenteringanoverseasmarketisdeterminingthephysicallocationofthefacilities,thismeansthatCRE&FMareinonerespectatleast,reallythefrontleadersintheglobalisationofanorganisation.Itisthereforeimportanttobalancethedefinitionofthecorporatebrandandtonewithprotectingtheneedsandprioritiesoflocalemployeesand local customers.

DoesCRE&FMhavetheculturalskillsettotake thisresponsibilityonboardglobally,oristhiswherelocalshouldalwaysbeallowedtodominate?Viewsdifferedhere:

• Thechallengeofoperatinginmanypartsoftheworld(eachwiththeirowncultureandregulatoryframe),requiresthebuildingofastrongcompanycultureandcompanyvalues.Prideandsenseofbelonging to a great company can supersede national culture,thebenefitsofwhichspanacrossqualityofservicedelivery,attractionoftalent,innovation,etc.Oneofthekeysindoingthatthoughisbeingable torecognise,capture,integrate,andcelebrate local practice.

• Thecontrastingviewwasthattheconnectivityandinterdependencyofglobaloperationscreatetensionsthatseemtobeoftenoverlooked–globalisationcontinuestobeadivisivesubjectamongpoliticalactivists,academics,businessleaders,andpolicymakers.

TheCRE&FMskillsetonthisispatchy,andaddressingthissuccessfullywouldprovideacompetitiveedge.

Globally standardising everything is not thought desirable

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56 REFlECTIONS ON THEMES PRESENT, THEMES ABSENT AND FUNDAMENTAl qUESTIONS

Reflections on themes present, themes absent and fundamental questionsBy John Hinks

LookingacrossallsixteenFuturesForumtopicsitisclearthatalotofthecontributorswereacutelyawarethattheCRE&FMindustryfacessomeprofoundquestionsaboutwhatitcouldandshouldlooklikeinthefuture,particularlyhowthevalueandbusinesspurposesoftheconventionalCRE&FMrolesarechanging.Forexample,thesuccessoftherootless,borderlessandweightlessbusinessmodelsurelyowesalottobreakingfreefromthe reliance on conventional workplaces and historic real estateportfolios,coupledwithtakingadvantageofincumbentbusinessmodels–adoublewhammyofagilityandcostavoidance,andatextbookapplicationoftheinnovator’sadvantage.Clearlytheexistingconceptoftheworkplaceisunderpressure–thecombinedeffectofaphenomenalpaceoftechnologicaladvancement,newattitudesto(new)waysofworking,andtheexploitationofthedeathofdistance,thecollapseoftime,andlabourarbitrageasglobalcompetitivedifferentiators.SohowcanCRE&FMturnthisintoanopportunitytorethinkandinnovatetheconceptofwhatrealestate,theworkplaceanditsservicescanofferthefutureofwork,andalsohowwemanagethem?

The future, now?TheFuturesForumclearlyilluminatedhowthebalancebetween asset and liability has already changed across realestate,workplaceandservices.Doesthismeanthatthebalanceandnatureoftheindustryshouldchangetoo?Readingthecontributionsitisapparentthatitalreadyis.Atoneextremeweareengagedintryingtoreducetheburdenofafixedrealestateportfoliowhilefreeinguptheoperationalusefulnessoftheremainingtraditionalworkplace.Aswesucceedatdoingthiswebecomeresponsiblefortheoveralloperationaleffectivenessandresilienceofborderlessnetworksoffirst,secondandthirdplacesbeingusedinemergentwaysbytoday’sdigitally-nomadic‘Millennials’.Thiswon’trevert.Whilsttheworkerandthebusinessusedtobetiedtotheworkplace,theworkplaceisnowchasingtheworkerandthebusiness.So,wheredoesthisleavetheCRE&FMindustry?Andhowshouldwereviewourentireworld?Considerthefollowingprospectsfortomorrow’sCRE&FMenvironment,promptedbytheFutures Forum discussions:

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• Clock-speed: How will incompatibilities between thespeedofchangeofthebusiness(intermsofprocesschange,geographicalchangeandthe globaldynamicsofbusinesscycles),andthespeed ofchangeoftherealestate,workplaces,andservicesaffectthebusinessaswellastheCRE&FMindustry?How can we build new service models that close this gaptocorrespondtotheacceleratedclock-speed ofbusiness?

• Integration:Movingfromanownershiptoa(short)leasemodelwithservicedofficetop-upsclearlyadvancesusintermsofrealestateclock-speed, asmovingtoflexiblere-configurableworkspacesequippedwithvirtualdesktops,roamingtelephony,andcombinationsofwork,teamandlivingspaceacceleratestheclock-speedoftheworkplace.Butshouldwereallybethinkingmorebroadly,sayabouttime-basedintegrationofservices(asdistinctfromfunctionally-basedintegratedsolutions)?

• Variability:Businessesareincreasinglycompetingonthebasisofspeedofentrytomarketsandspeedofadaptationofserviceorproductmodels.HowdowecreateascalableCRE&FMservicemodeltosupportthis?OrshouldwebethinkingaboutdevelopingdistinctCRE&FMservicerolesforfacilitatingseamlesschangebetweenthephasesofthebusinesscycle –sayforbusinessesmovingbetweenexpansion,contraction,andrelocation,similarlythroughmarketupturnsanddownturnsandnaturalbusinesscycles?

• Global service models:Therewasalotofdiscussionontheglobal/localdilemma,butwhataretheopportunitiesandriskstotheCRE&FMindustryfrom,say,globalisation,commoditisation,outsourcing/offshoringandtheemergenceofglobalisedsharedserviceplatforms?Howhave24/7businessmodelsactuallyskewedthedeliveryandmanagementofCRE&FM,andwhatshouldwelearnfromthis? Forinstance,howdowegeographicallyintegratenationalandregionaldifferencesinthedefinition andpracticeofCRE&FM?

• The intensity of workplace usage:Thisappearstobe an ongoing live experiment – what is the upper limitofoccupancydensity?Whatwillbreakfirst,andhow–theworkspace,theservices,thefacility,orthebusiness?Isthisrelatedtowhatmakesproductivitytickfordifferentpeople(generationallyandintermsofworkstylepreferences)?

• Monitoring and fine tuning:Withtheriseinremotesensingtechnologies,howshouldwerethinkthehands-onfacilitiesmanagementrole?

• The dynamic workplace: Theconstantadjustmentbybusinesstoevolvingtechnologies,newwaysofworking,andtheentryofnewgenerationsintotheworkplace is leading to work behaving as an adaptive system – the way in which it operates is emergent andinconstantadaptiveflux.Asonecontributorproposedinthe‘Workplaceofthefuture’topic,economyofscalewillbesucceededbyeconomyofflexibility.Howthenshouldwetakethisintoaccountwhen designing alternative workplace solutions (AWS)?ShouldweberevisitingandretuningtheAWSprovisions‘onthehoof’tokeepthesupportforthisevolvingsystemoptimal?ShouldwebehelpingbusinessesadjusttoAWS(isthisactuallyaprimeopportunitytoberecognisedasanagentofchangebythebusiness)?Inwhichcaseanotherquestionarises – who is designing these integrated solutions basedaroundworkplaces,technologyandnewwaysforworkingfortheGenYworkforce…probablyGenXor‘babyboomers’;isthisnotalatentdisconnect?

The journeyThemostfundamentalchallengeseemstobedecidingwhatweshoulddonextasanindustry.Asseveralcontributorsobserved,ifwearegoingtobeproactivethenweneedtoimaginewhattheCRE&FMindustrycanuniquelycontributetothefutureofwork.Whilst weareclearlylivingthrougharecalibrationofwhatCRE&FMdoesnow,muchofthatiscopingwithanadaptive system. How should we collectively engage inrethinkingourentireparadigmsoastodrivechange,ratherthansimplycope,andtodeliveradisruptiveinnovationofimmensesignificancetoenterprise?Perhaps we could imaginatively apply all the emergent technologies and new attitudes to work to support the deliveryofanewscalableconceptofworkbasedaroundservicesforpeopleandtheirindividualproductivity.Surelywhilstthetechnologiesandways ofworkingareevolvingandadaptive,thatpresentsanopportunityfortheindustry?Soherearesomeideasforanewserviceparadigm–somedrawnoutofthemespresentintheFuturesForum,otherfromthemesabsent:

• Managing uptime globally: How should we manage critical services/suppliers to ensure uptime ismaximised–emphasisingtheresilienceoftheworkplace and services in the way we set up and managecontracts?Whatifwedesignedservicelevelagreements and reward structures around the businessvalueoftheproductivitybeingsupported –forexample,usingthecostofdowntimeand/orcostsofunreliabilityintheserviceorworkplaceasa

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keymetric?Whatchangeswouldbeneededtothecurrentprocurementandsuppliermodels?Whatchanges will clients need to make to the way they managerealestate,workplaces,andservices?Couldwedothisthroughapartnershipmodel?

• Contingency and resilience:WhatwouldCRE&FMlooklikeifwedesignedandspecifiedtheresilienceofservicesaroundtherecoverytime(RT)andrecoverypoint(RP)needsofthebusiness?Howwouldthisaffectthedesignandmanagementofintegratedservices?Howwouldweaccommodatesupplierswithdifferentrecoverytimesandlevelsofserviceresilienceinsuchintegratedsolutions?Isthissimply a process alignment challenge between partners,orisitmorecomplexthanthat?Ifso,asacontributorsuggestedinthe‘Partnerships’topic,compensationriskandcost-recoverymodelswouldneedtobefullytransparent,withallrisksquantifiedand shared within a structure that rewards innovation andcreatesasharedcompensationpoolforbothclientandsuppliers.Thisposessignificantchallenges–forinstance,howwouldwedesignintegratedservicesolutionstosuitdifferentsensitivitiesandRTandRPrequirementsacrossthebusiness(globallyandintermsofthedynamicsofthebusinesscycle)?Howwouldthisaffectthewayweplanformitigatingandrecoveringfromcascadingfailures?CouldthetraditionalRequestForInformation/RequestForProposalsourcingprocesshandlethis?And,topickupontheCREperspective,howwouldafocusonRTaffectthewaywelookatlandlordRT,andhowwedesignforresilientservicesglobally?

• Risk:Moregenerally,itwasnotedbyacontributor tothe‘Risk’topicthatCRE&FMtypicallythinksaboutoperational risk and business continuity within the contextoftheirdisciplinealone–surelythisneeds tochange?

• Climate change:HowdoesclimatechangeaffecttheroleofCRE&FM(fromchangesindegree-days,changes in energy needs and energy security through tomanagingforextremeweatherandseismicrisks)?HowshouldCRE&FMthinkaboutthisasaglobalchallenge – is there an opportunity to apply this thinkingacrossaglobalrealestateportfolioinawaythatbuffersthebusinessagainstrisks(ratherliketheconceptofhedgingbets)?AndhowdoesCRE&FMexacerbateclimatechange,andwhatcouldandshouldwedoaboutitcollectively?Asacontributortothe‘Sustainability’topicasked,towhatextentisthisfirstandforemostabehaviouralchallenge?

• Flexibility:Whataretheimplicationsofdirectandindirectlock-inandinflexibilityinlong-termsupplierdeals,similarlylong-termleases?Conversely,howdoes vulnerability to supplier viability and the ownershipofdata/intelligentproperty(IP)dimensionsaffecttheprospectsfortheIntelligentClient?Howdoesitaffectcontractrenewalsandpartnershipstoo?

• Optimising: How should we become more systematic athandlingthetrade-offsbetweencost,risk,flexibilityandquality?

• Integrated solutions:IfthevaluepropositionoftheIntelligentClientisabouttheabilitytomanagetheintegrationoffunctions,suppliersandprocessesaroundbusinessneeds,thenthiswillinvolvetheverticalandhorizontalrealignmentoffunctions, andthesewillneedtobeflexedovertime,geography,businesscyclesandbusinesscontexts –sodoesourintellectualcapitalneedadapting? Asacontributortothe‘IntelligentClient’topiccautioned,akeydifferentiatoroftheIntelligentClientwillbethinkingstrategically,whichwillincludelong-rangehorizonscanning,allofwhichwillhavetobeunderpinned by controlled and consistent processes.

Foundations for the future of CRE&FMMyviewafterparticipatingintheFuturesForumisthatiftheCRE&FMindustryisgoingtobeabletomakethesetypesofstep-change(irrespectiveofwhethertheylookexactlyliketheseindetail),thenwefaceapalpableneedfor(aCopernican)shift.Specifically,weneedtoputtheworkerandtheirproductivityatthecentreofourfocus,ratherthanthefacility,andthenre-imagineour services and how we manage and deliver them aroundthat(andinthatorder).Theoffice-in-a-backpackmodelwillprogresswithorwithoutus,butwearewellplacedtobetheintegratorsof(todate)relativelyuncoordinatedchange.Weareideallyplacedtocreatethesynergyforthebusiness,especiallyifweworkwithHRandITinanintegratedbusinesssupportservicesmodel–thequestionformeis,arewewell-prepared?Whilstnumerouscontributorspresentedideasandevidenceofnewwaysofthinking,manyfundamentalissueshavetobesolvedtoconsolidatethefoundationforinnovation,andthesemostlylookliketheydependon the industry working together:

• Know-how:Howhaveskillgaps,agegaps,datagaps,IPgaps,processgaps,andsoftwaregapsshapedCRE&FM,andhowcanwedealwiththembetterin

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thefuture?Plus,howshouldwegoaboutcapturing,consolidatingandconveyingknow-how,muchofwhichisprobablytacit?Inthe‘Attractingtalent’topic,itwasnotedthatthechangestotheCRE&FMrolemeantweneededseveralformsofnewtalent:

– Asbuildingsbecomeincreasinglysophisticatedandtechnologicallycomplex,theindustrywillneedtoaddress the new challenges in maintaining and managing them by finding and developing the necessary talent.

– As‘people+technology+services’becomemoreimportantthanplace,whatchallengesdoesthatposefortheCRE&FMskillset?

– Asthephysicalspacebecomesseenasastrategictool then the roles and positions will be seen as a strategic partner and will need to attract a more diverse talent pool.

• Itwasalsoobservedinthe‘Attractingtalent’topicthatCRE&FMstillhastodefineitsprofessionalknowledgebaseanddevelopanindustryR&Dcapability and vision.

• Learning:Forinstance,whatdidCRE&FMlearnfrommanagingthrough9/11,HurricaneKatrina,theJapanesequakeandtsunami,birdflu,andtheAugust2003US/Canadabrownouts,etc.–wasthisevent-specificlearningcapturedandanalysedforgeneralre-application?HowmanyCRE&FMorganisationsundertakestructuredproblemsolvingformajororrecurrentevents?

• Management information systems (MIS):WhatdoesthefacilitiesmanagementFMsoftwarecompatibilityanddatalegacyreallylooklike?WhichofourexistingdatasetsareassetsandwhichareliabilitiesforthefutureofCRE&FM?Howshouldwedealwiththelimitationsofageingsoftwareandthequalityoflegacydatasets?WillwebeabletoevolveourMISbysiftingoutdatathatmaybeirrelevanttotoday’swaysofworkingandbuildings?

• Support or illumination?Towhatextentdowesuccumbtoreinforcementtrapsinthewayweselectandsubsequentlyanalyseourdatasets?Aretheresmarterwaysofanalysingthedatawhichcouldhelpusdrawmoremeaningandvalueoutofthem?Willfuturedata analysis approaches be shaped by this or do we needtostartagain(again)?Issoftwaredominatingprocessesratherthantheotherwayaround?

• Data, information and knowledge:Atwhatlevelsshoulddatashouldbeopen,closed,heldinternallyandheldexternally?Theremaybeaglobaldatawarehouseopportunityhere,althoughasuiteofstandardsondatametrics,assumptionsandhandling/analysiswillbeneededtomakeuseofthis,andthefirewallagainsttheentryofshoddydatawillneedtoberobustlypoliced.Thiswouldsupportonecontributor’ssuggestioninthe‘Integratedsolutions’topicthatweneedasinglegoldensourceofdataforuse by all users. Maybe a shared protocol is needed thentocoverstandardsofmeasurement,perhapsforthemetricseven?Perhapsitwouldbebesttorethinkwhatmetricsweshouldbeusingfirst,bearinginmindcontributors’commentsaboutthedislocationbetween what we measure and what matters to the business?Veryfewcontributionsdistinguishedbetweendataandanalysis,plus,asacontributortothe‘Knowledgemanagement’topicpointedout,akeyissueisknowingwhattodisposeofandwhen...

• Standards:Consistencywithinsector,acrosssectorandservices,globallyandacrossbusinesssectors –intermsofdata,software,meaningofmetrics,processes,plusanalysesareallcrucialforcoordinating asynchronous and geographically dispersedmanagementfunctions.Canweidentifytheflawsinourlegacydatasetsand,ifnot,howshouldwehandlethis?

• Value:So,howwellequippedisCRE&FMtooptimiseresources according to their business value/return on investment?Probablyverypoorly,althoughthediscussionsaboutvalue-basedpricingandbusinessrelevancesuggestedthatacross-industryapproachwouldhaveagoodprospectofsuccess–aroleforanindustrythinktank?

• Expertise:HowwillglobalisationaffectthecentreofexpertiseforCRE&FM?Forinstance,willtherootless,borderless and weightless organisation lead to CRE&FMoperatingasadispersednetworkofexperts,orwillthisbeatransitoryphenomenonandas these organisations consolidate they will return to acentralfunctiontoconsolidatetheiroperationandachieveeconomyofscaleandexpertise?Somebusinessesarealreadymovingbackfromalternativeworkplacestrategies,soshouldweseethefutureofCRE&FMasaspectrumofservicemodels?Ifso,couldwedrivethesecollectivelyasanindustry?

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Alternatively,couldCRE&FMpolariseordividebetweenfacility-centricapproachesandperson/services-centricapproaches?

• Capability:Eliminatingdifferencesincapabilitymaturityamongstteamsofsuppliersand/orbetweenasupplier(s)andtheclientarecrucialtothesuccessfulnessofserviceintegration(horizontallyorvertically).Ifsomepartiesarerelativelyad-hocintheiroperations,andothersareadvancedintermsofprocessdefinitionandconsistency,thenamalgamatingtheseintoanintegratedservicewillbeverydifficult.Howshouldwedealwiththisaspartofdevelopingeffectiveintegratedsolutions?

• Resource optimisation:Whatapproachesdowetake to optimising how we allocate our resources in termsoftheirbusinessimpact?

• Supporting the dispersed team: How does the CRE&FMsupportservicesmodelneedadaptingforoffsiteworkersandtemporallydispersedteams?DoesCRE&FMalreadymirrorthechangingworkbehaviourofbusiness–wherealready50%ofonlineaccessoccursonnon-desktopinterfaces?

• Service focus:Consumerorcustomer?Howshould we approach the distinctions between consumer and customer/client – and how do our obligations and rolediffer?Dowereallyunderstandthecostsofinconsistencyinservicesforpeople(andthebusiness)?Plus,itisgenerallyrecognisedthatservicemanagementrequiresadifferentapproachtotheproductandprocessmanagementmodelsthatCRE&FMmorecloselyfollow.Whatshouldwedoaboutthatasanindustry?Asonecontributorarguedinthe‘Customerexperience’topic,ifwereallywanttore-centreCRE&FMaroundthequalityofcustomerexperience,doesitmakesensetoretainthesamedeliverymodel?

• Global or local:Asacontributortothe‘Globalisation’topicobserved,customerexperience(andthuscustomersatisfaction)iscreatedlocally,adistinctionwhichwasechoedstronglyinthe‘Servicequality’topic:“therewillbenoone-size-fits-allglobalanswertotheservicefocusissue”.So,howistheindustrytacklingthis?

• Impact:The‘Marketdifferentiation’topicdiscussedthechallengefacedbytheinternalCRE&FMteamtoshow it is adding value beyond being a contract managementinterface.Closelylinkedtothiswasanother debate about adopting headline business metricstoreportCRE&FMperformance,forinstancereturnonequity(ROE).Butdoweunderstandhowthefunctionaleffectivenessoftheworkplace,the

servicesandtherealestateactuallyinfluenceaheadlinebusinessmetricsuchasROE?Asnotedinthe‘Value-basedpricing’topic,wemayrecognisethatvalueisnotaconstantforallseasons–ratheritis highly contextual – but how do we deal with this operationally?Specifically,howdoCRE&FMservicesactuallyaffecttheproductivitythatgeneratestheROE?Andwhereandhowdoesthetractionoccur(intermsofproductivityand/orROE)?Surelywehavetodevelop our understanding and then use this to evidencethetractionofCRE&FMbeforewecanclaimmore than correlations between headline business metricsandCRE&FMvalue?Thatwillinvolveengagingdeeplywiththebusinessoperationsofcourse;whichmayalsochallengethevalueofmanyofourexistingmetrics.

What next?So,myconclusionfromtheFuturesForumisthatthereisapalpableandacknowledgedchallengetoCRE&FM,thatanewwayofthinkingisneeded–perhapsthis isare-invention,perhapsitisclosertoaprofoundadaptation – but that without a collective approach by theCRE&FMindustrywewon’tmaketheleap.Wedon’thaveaglobalindustryknowledge-base,wedon’thaveasubstantialR&Dbase,wedon’thaveanindustrythinktank,theindustryisstillreactingtoinnovationbyothersratherthanproactivelyleadingit,andwedon’thavethecommitment to a progressive debate that is needed to produce an integrated change. However the Futures Forum indicates that we do have a lot interest in the issues,andwithyourcontinuedinterestwehavethemakingsofathinktankifwecanagreeamandateforchange.Forinstance,onecontributortothe‘Businessrelevance’topicsuggestedestablishingaglobalforuminvolvingthecorporateleadersofCRE,FM,IT,HR,andProcurement,alongsidecorebusinessexecutives,fortheexchangeofvision/ideastooccur.

Ultimately,theFuturesForumwasaboutgeneratinggreatquestionsratherthansimpleanswers,andhenceresultsofthediscussionsshouldgiveusgroundsforoptimismaboutCRE&FM.Andso,whilsttheFuturesForumposessomeprofoundchallengestoCRE&FM,myguess is that you will also see some great opportunities fortheindustry.

Having read the summaries of the topics and my thoughts on the prospects for CRE&FM, let me know what you think too please.

John.Hinks@uk.zurich.com

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