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A business is more than revenue and earnings; it is about long-term value for shareholders and stakeholders. What drives long-term value? Purpose.
Purpose is more than enthusiasm, passion or a mission statement, and more than owning a breakthrough technology. Purpose answers, “What would be lost if our company disappeared?” It defines a company’s core reason for being. Purpose compels a company to reach higher and achieve more. Competitors wonder where to find its fairy dust.
In the world of real estate, a company with a lived purpose radiates authenticity and does well by doing good. Customers, partners and investors recognize its value proposition. A framework called the Five P’s can help unlock a company’s purpose:
1. Portfolio strategy and products
The products and services a company provides, and the ‘where’ and ‘how’ choices it makes
Demonstrating purpose in products and services is a two-step process. First, the business portfolio/strategic plan must align with the company’s purpose. A company can identify ways to reshape its business mix in an active, intentional way. Second, products and services must match the company’s purpose; those that don’t must be winnowed out.
Any given real estate company has the freedom to choose how it can make a positive difference. For example: Will a particular commercial investment increase local property values and boost economic health? Will a rental property create jobs, reduce crime?
If investing in industrial or special use real estate, ask: Will it be “green?” In a planned residential neighborhood, will the homes be sustainable? Is there a way a raw land deal will eventually spur a community’s growth, or improve its infrastructure?
2. People and culture
The talent and management a firm deploys
Purpose begins with human beings. Employees and stakeholders are sources of strength and a hard check against inauthenticity. Employee sentiment is often the single greatest force undermining insincere claims of purposefulness.
Human-resource decisions grounded in purpose should be reflected in career pathways and development. Managers must articulate and model the mindsets and behaviors linked to company purpose, and hold employees accountable for meeting targets. Meaningful jobs must be given.
The quest for meaning is part of the human condition and is embraced, not squelched, by purposeful organizations. Employees at purpose-driven companies are more engaged at work — a powerful competitive advantage.
According to Forbes, companies that invest significantly in employee and broker wellbeing outperform their peers. That makes sense — how enthusiastic, really, will people be if they are just punching a clock?
3. Processes and systems
The operational processes adapted to meet purpose-related targets
Processes and systems address a core “how” of any business model: the operational initiatives, incentives, and governance mechanisms a firm relies upon to realize its purpose. Robust systems keep a purpose engine humming.
Consider the inner workings of a typical real estate firm. Embracing best practices, from sourcing sustainable vendors for a company cafeteria to offering paid leave for community service to contributing to environmental causes, is a first step.
4. Performance metrics
Measures of achievements, progress, and incentives that make an organization’s purpose tangible
Key performance indicators that tie to a company’s purpose should be identified, measured, tracked and incentivized to meet targets. How many employees and agents are from underrepresented groups? How many contracts are held with minority suppliers? What does your customer base look like in terms of diversity?
“What gets measured gets managed,” as Austrian management consultant and educator Peter Drucker famously observed. Conversely, what you seek to manage should be measured, on a consistent basis.
Purpose metrics should inform not only day-to-day operations but also allocation decisions such as capital expenditures, and mergers and acquisitions, as well as company-wide transformation initiatives.
5. Positions and communications
How external positions and affiliations deliver on a company’s purpose
Purpose must be embedded in how an organization engages with the public. A brand has a responsibility to support at least one social issue that does not directly affect its business; this strengthens its social license to operate. Thus, philanthropy and corporate giving become the logical extensions of a business model, eliminating the gap between “walk” and “talk.”
The Five P’s consistently elevate purpose if regularly and rigorously adjusted over time. There will be uncomfortable decisions to make and hard trade-offs. But purpose is a source of competitive advantage — if genuine and infused in a systematic, holistic way.
Jim White is, PhD, is the founder and CEO of PHT Opportunity Fund, LP, and the best-selling author of five books. He also is chairman and CEO of Post Harvest Technologies, Inc. and Growers Ice Company, Inc., and founder and president of JL White International Connect with him on Facebook and Twitter.