The Biggest Name You’ve Never Heard Of

I’ll bet you’ve never heard of Jack Valtrade.

Jack is one of the most successful commercial real estate operators in the eastern US.  He owns 25 shopping centers, a 200 store retail chain, a leasing company, a property management company, and a consulting business.  His net worth is estimated at $500 million, all self-made.

Chain Store Advisors interviewed Jack last month to gain some insights into his success.  “I have an unusual background,” he said.  “My dad is a PhD Economist with the Census Bureau and my mom teaches Geographic Information Systems at Princeton.  My first job was working for a commercial real estate broker when I was 16.  I put myself through M.I.T.  doing feasibility studies for a shopping center owner, and then got my Master’s degree in Statistics with a concentration in Consumer Research.”

Unlike many retail entrepreneurs, Jack is a big believer in extensive market research.  Before he opens a new store or builds a shopping center, he rents an apartment in the market for three months and loads his database with every existing retailer, restaurant, shopping center, and traffic generator in the area.  He then creates a computer model to estimate potential sales and meets with the local brokers, store managers, and property managers to get their views on hot spots, trends, and local culture.

Why haven’t you heard of Jack Valtrade?  Because he doesn’t exist, and he never will.  Given the complexity of the retail marketplace, the only way to be successful is to build a team of experts in the various disciplines of the business.

No one can be a Jack of All Trades.

However, anyone can build a great team, with the right vision, partners, processes, and systems.

Vision

This famous work by M.C. Escher captures the essence of the “top down, bottom up” vision for success in commercial real estate.  The “top down” part, symbolized by the chess board, is the high level strategy including goals, objectives, and the approach to executing game plans.  Success depends on an accurate assessment of the situation, with the details provided by the “bottom up” observation represented by the buildings on the left.  Whether the goal is to lease a shopping center, open a store, or offer the right mix of products to the local trade area, a well-formed vision is the starting point.

Partners

National chain stores are a fact of life.  Companies such as Wal-Mart, CVS, and McDonald’s have a significant competitive advantage from their efficiency in marketing, distribution, and management.  However, they can’t possibly know every detail of every market in the US, let alone the world.  They must rely upon the local market knowledge of brokers whose job it is to know everything that’s going on in their back yard.

On the other hand, the brokers don’t have the “big picture” view of a chain operator, or even a shopping center owner, unless they spend the time to listen and learn.

Good partners have mutual respect for their expertise and believe that they need each other to succeed.

Processes

Because of the complexity of the retail marketplace, a purely “linear” process for executing a game plan rarely works.  The process must be more of a “loop” that includes the following phases:

  1. Research – inventory of the facts necessary for analysis including the type and location of relevant stores, local culture and trends, and the lessons of experience.
  2. Planning – analysis and synthesis of the research to create a “game plan”
  3. Deciding – meeting of the partners to define the actions based on the “game plan” as well as any unplanned opportunities that might arise
  4. Execution – performing the agreed actions while watching for unexpected outcomes, new information, and other situations that might change the validity of the game plan

During the execution phase of the “loop,” the situation may change and require another iteration to determine whether a different set of actions might be more effective.

Systems

Speed and accuracy are critical to successful outcomes when the “loop” is being executed.  If the changes in the market are not factored into the process on a timely basis, the players will be trying to solve last week’s problems in today’s situation.  If the facts aren’t correct, the tradeoffs that are the essence of decision-making and risk management will be distorted and lead to disappointing results.    The partners need to be supported by work flows, analysis and visualization tools, and document management systems that keep the process moving at the speed of the market.

Ever wonder why some companies have fully leased shopping centers or rarely close stores?  You got it:  they have the vision, partners, processes, and systems to support their success.  They adapt as the world changes.  They run circles around their competitors.

You’re not going to find Jack Valtrade; maybe you should take a closer look at your practices and make sure that you’re putting a winning team on the field!

One thought on “The Biggest Name You’ve Never Heard Of

  1. Pingback: The Biggest Name You Never Heard of: how the right vision, partners, processes, and systems drive success | re-lytics

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