What if the CEO of the largest company in the universe called you and said he had a little project he'd like you to work on? He thinks you’re a pretty swell leader, and he wants you to shake up the office landlord business.
What would you do to make Mr. Cook a happy man?
Even under normal circumstance, being a landlord is a daunting challenge. Running a modern office building requires tremendous skill and knowledge in building systems, finance and budgeting, sustainability, and leasing, just to name a few issues. You also have to be part diplomat (with the fire marshal, for example) and effectively, the mayor of a small town. There’s lots to do and many people needing your time and attention.
However, in all of the complexity, some asset and property managers seem to forget who their customers are. The investors are important; heck, they are the boss/employer. The building systems need to be tip-top and the budgets dead-on.
But many professionals in landlordville can get caught up in the sticks and bricks and forget they are running a business to serve other businesses (AKA tenants) and ultimately, people.
“Apple's company culture: "Excellence has become a habit."
- Tim Cook, Apple earnings call 1/18/2011
However, one of the greatest textbook examples of “wow” is Apple. I bet you have great stories about them, and I do too. I am in awe every time I walk in a store.
In case Tim Cook’s big time status and positive reviews don't impress you, let me pause for a moment to give you Apple’s bonafides as compared to the rest of the retail industry: (stats as reported by the Helsinki based consultancy Asymco)
- Annual store sales in the range of $300 per square foot is considered respectable in the US.
- The US national average for regional malls is $341.
- The average for specialty apparel retailers is $400 per square foot.
- The average for jewelers is in the range of $600 per square foot.
- The median for the best 20 US retailers is $787/sq. ft.
- As you can see from the chart, Apple sales exceed a stunning $6,000 per foot or over 13 times the 20 best US retailers.
Apple’s mission statement says, in part, that it “designs…the best personal computers in the world.” I, probably like you, am fascinated by the Apple engine. How do they keep growing and radically innovating year after year while Dell and other PC manufactuers get hammered by consumers and Wall Street alike?
> Focus ”It means saying no, not saying yes. We do very few things at Apple. We are $100bn in revenue with very few products. There are only so many grade A players. If you spread yourself out over too many things, none of them will be great.”
> Simplicity ”Make complex things simple. A lot of people think it means take something simple and leave it at its core essence. But it isn’t that. When you start to build something, it quickly becomes really complex. But that is when a lot of people stop. If you really know your product and the problems, then you can take something that is complex and then make it simple.”
> Courage ”Courage drives a lot of decisions in business. Don’t hang on to ideas from the past even if they have been successful for you. You don’t build a product just because everyone else has one. ”
> Best ”If you can’t enter the market and try and be the best in it, don’t enter it. You need that differentiation. At Apple if we can’t be the best then we are not interested in it.”
It's Not About The Building
So how would you take the Apple phenomenon and apply it to office buildings? If I got the call from Cook, here are some things I would stir into the management mix based on Greg Joswiak's learnings:
Focus on the user – think like a tenant. How can you help their business to grow? I’ve heard many a CEO say “my most important assets get on the elevator every night.” So how can your input – a physical asset, help them attract and retain high value employees? How can you deliver an asset and an experience that turns real estate into a competitive weapon?
Most landlords give half-hearted focus to supporting tenant's business needs. Be different: study what Google, Facebook , Salesforce.com and Apple offer in their facilities. What can you offer that will help your customers compete in the coming war for talent (my friend Justin Bedecarre recently hosted an entire conference on this subject in San Fancisco)?
One idea: think of all the errands we run in life and create a supercharged concierge to help. Physical access, food, and support amenities are all areas where you can have a significant impact.
Also, I bet that regular “tenant interviews” will yield valuable suggestions about the needs of the business. Most owners only do these interviews when they are purchasing an asset. The very act of listening will differentiate you from competing buildings that are worried about the HVAC and elevator systems most of the time.
Can you transform a building into something cool, fun and different? What would an "Apple Store" office building look and feel like?
Make it easier to interact with your staff and your building; be driven by “software, not hardware.” Think about the beauty of the Apple interface over the wickedly complex computer underneath. Landlords should think like a marketer and overlay a consistent look and feel in online and physical interactions with the building.
At Apple, the staff will beam with pride and sometimes even break into applause when you walk out with a new iPhone. When new tenants move into the building, do you simply enforce policy on use of the freight elevators or are you working like a maniac to welcome them.
Here’s another idea: does your building use social media as a way to interact with tenants? Make it simple to communicate with you, and tenants will thank you.
By the way, here’s an example of a great Facebook page of an office complex in Atlanta. My friend Tony Wilbert “gave a building a personality” through social media. Now Galleria is building a community and doubtless creating rabid fans in the process.
When a tenant comes in with a problem, empower your people to delight their customers. I know that Apple has rules, but I get the feeling that the Genius is really on my side when I happen in with a problem. They will do everything they can to help me be successful and in doing so, Apple wins.
Are your engineers, security staff, cleaning staff and parking folks similarly empowered? Whether you know it or not, they are the face of your building. Turn your team into office building Geniuses who are knowledgeable about your mission and empowered to bend the rules to help customers.
Pride and passion are wonderful traits to see in an Apple store and in an office building staff.
Strive to run the best building in your city. Heck, run the best building in America. Don’t accept excuses because the asset is old or "we’ve always done it that way" (back to courage). Transform your asset and it’s people.
Take pride in the building. Even though few will see it, one should be able to eat off the physical plant floor. The security staff should have pressed uniforms along with smiles on their faces, and the parking garage should sparkle. Think of your building as an Apple store; it should positively gleam.
So, as you pick up line 1 and take that call, know that Tim Cook once said, "Price is rarely the most important thing. A cheap product might sell some units and somebody may get it home and you know, they feel great when they pay from their wallets, but then they get it home and use it, and the joy is gone. And the joy is gone every day that they use it and that's why they're not using it anymore! You don't keep remembering 'Oh, I got a good deal,' because you hate it!" (Keynote speech at Goldman Sachs Technology and Internet Conference, February 14, 2012)
Free rent and low rates alone will not differentiate you in the end. Through a singular focus on excellence and on your customer's success you can seperate your building from the pack. And when you do, the financial rewards for both you and ownership will certainly follow.
I hope some real life landlords will undertake the “Cook Challenge” and astonish the tenant community. Just like Apple, sales (occupancy) for both the building and it's tenants will zoom if you do.
Note: If you are a tenant in a building that is simply astonishing, reach out to me and I’d love to interview you for an upcoming post and give credit to landlords who would would make Tim Cook smile.
Posted August 27th, 2012