There is a saying that history doesn’t always repeat itself, but it often does rhyme. As a result, humans are quite good at looking to the past to inform how they should behave in the present. In real estate, we live and breathe this phenomenon because we operate in a cyclical industry. We are all drawing the parallels between past downcycles and the current economic landscape. We hear clients asking themselves a familiar series of questions such as “What can we learn from what happened to real estate after the recession of 2001, and how will that knowledge help us predict the effect of COVID-19 on the performance of our assets/portfolios?” While this is a helpful analysis, we often see organizations fail to ask the more important, future-focused question: “How must we as leaders, not just the business, not just the investment thesis, change to prepare for and anticipate the next volatile, uncertain and chaotic event?” This question is essential because while leaders make changes to how the business operates retroactively, they do not approach their own leadership with the same rigor. Thus, they fall back on bad habits once the immediacy of the crisis passes.
Why have we struggled to overcome this hurdle? The fact of the matter is behavioral change is hard, and it is even harder to sustain. Consider businesses dedicated to diet and fitness – an entire industry built upon the idea that it is difficult for individuals to overcome old habits. The reason why change is so difficult is we all too often expect too much change, too quickly, and we place all the responsibility on the individual with limited scaffolding and support. New habit formation requires deliberate processing, changes to one’s environment to eliminate cues that trigger our default reactions, and external accountability mechanisms that force us to implement new actions.
As executive coaches, we see this happen with even the best leaders. One can intellectually know that they must delegate authority and give direct reports the opportunity to make their own decisions. And for a time, they do well. Until the pressure is on, and someone is at risk of making a mistake; then the perfectionist tendencies bubble to the surface and the leader reverts to what they know, what is comfortable.
Because of the current pandemic, our new baseline is operating under stress and pressure. The new normal has turned into a barrage of uncertainty, volatility, and challenge. Understandably, leaders will resort to their default leadership style, for better or worse. Coming out of this crisis, many consulting firms will say that the following qualities will be important to see in leaders: learning agility; emotional intelligence; influence and persuasion; an ability to bring people together; an ability to create collaborative work environments; an aptitude for setting a strong organizational culture; openness to continuous change and learning; a talent for motivating and directing teams… the list goes on and on. In a sense, they aren’t wrong. Each of these qualities are important. However, there is a scene in “Pride and Prejudice” where Mr. Darcy outlines the qualities a woman must possess for him to consider her “accomplished.” The list is exhaustive. Elizabeth Bennet replies, “I’ve never met such a woman. I think she would be a fearsome thing to behold.” In this vein, we have never met such a leader who single-handedly possesses all the above characteristics. If we did, they would be a fearsome thing to behold.
We are making the mistake of placing too much emphasis on any one individual possessing these skills rather than building the right cadre of complementary skillsets across an entire team. We cannot continue to ask leaders to be all things, all the time. And, when looking for executive leaders in the future, businesses should be looking for two distinct qualities that will enable them to grow the business and teams necessary to stay competitive: (1) Business Strategists and (2) People Strategists.
Throughout real estate, we have a preponderance of excellent planners who can identify objectives and outline how capital should be allocated across asset classes. In short, leaders are particularly adept at building an investment thesis. However, we find that such theses rarely go beyond those tactics. We do not always adequately consider and plan for what such an investment thesis would require of the organization. What will such investment targets mean in terms of how we build business and the type of capital we pursue? How should we resource ourselves from a talent perspective? Will our culture enable our projections? Are our leaders equipped to motivate and engage their teams to achieve our aspirations? And, more importantly, executive leaders do not fully think through alternative scenarios for the business. In other words, how would the strategy – not just the investment thesis – change if the unthinkable happens? If the current economic crisis has taught us anything, it is that the unthinkable can and will happen. In the future, it will be incumbent upon executives to appropriately consider extremes such as evaporation of cash flow overnight, a fundamental shift in how they operate their business and interact with tenants, or even a disaster that incapacitates the entire executive team.
Organizations do not have to have all the answers in terms of what a leadership team must look like from a skillset and characteristics perspective. However, they should look for individuals to place into critical executive roles who are true people strategists that have an ability to build a team that has complementary skills. Yes, have someone who has incredible interpersonal skills (e.g., emotional intelligence), but counterbalance that with someone who is a direct communicator. Hire for the divergent thinker who can take a conversation into unknown problem-solving territory, but also hire for the linear thinker who can converge on a solution and support implementation. Allow individuals to play to their unique strengths that they bring to the business; that is what you hired them for. A people strategist understands this critical insight and recognizes that diverse personality traits and capabilities enable a team’s success just as much as diverse technical expertise. What’s more, people strategists are critical for providing an environment in which business strategists can shine as well. Both are essential to the future of your business, especially during times of volatility and uncertainty.