The Strategy Alignment Model

n increasingly sophisticated body of theory and practice has emerged over the past 20 years among those working to define the role of real estate in enhancing corporate business strategy. The discussion has covered many levels, from on- and off-site workplace concepts, to overall site and facility guidelines, to the planning and management of entire portfolios of real estate assets. One constant has been addressing ways that real estate can help or hinder organizations in their ability to:

• recruit and retain the best people;
  
• manage organic and acquisition-driven growth;
  
• expand the customer base, markets, products and services;
  
• refine organizational structure and culture;
  
• develop branding and identity programs;
  
• enhance workflow and communication;
  
• support Internet and related transformational technologies;
  
• reduce costs and control risk; and
  
• enhance productivity.
  

Conference speakers and writers of industry journals cover these issues routinely. Harder to find, however, are case studies that describe specific real estate actions in the context of measurable organizational outcomes.

       
About 10 years ago, during the beginning of a consulting assignment with SC Johnson (SCJ), our client contacts — Scott Weas and Chuck Boles — urged us to develop a straightforward planning framework that could be used to measure and communicate real estate strategies with senior executives in the company. The result is the Strategy Alignment Model, which has been developed and refined on over 100 projects with SCJ and with dozens of other Fortune 500 companies.

       
The model consists of three components, which are based on seven guiding principles (see Figure 1). The first component, Content, and its three associated principles, are the focus of this article. Two subsequent articles will discuss the remaining components of the model, Process and Benchmarking and four other principles of planning.

       

Principle 1: Planning models should be based on the language and tools of business applied to real estate, rather than on architect and broker-based schemes imposed on organizations.

       
The Strategy Alignment Content Component is a framework for visually, directly aligning real estate with core business strategies as a series of cause-and-effect relationships. It was developed during the early phases of a strategic master plan for SCJ’s Racine, Wisc., headquarters. Among several scenarios, a decision was made to build a separate headquarters for one of SCJ’s larger businesses, Commercial Markets.

       
The content component was used to collect, analyze and communicate information throughout the project. Over the course of several work sessions, senior leaders identified 21 key business strategies, for which 25 real estate responses were generated. Behind all of the strategic concepts — both organizational and real estate — were dozens of detailed implementation actions. Figure 2 depicts the structure of the content component, and Figure 3 shows the actual alignment of five of the key organization/real estate strategies and measures.
       
The Content component is structured around five acknowledged building blocks of corporate strategy: (A) mission for today and vision for the future; (B) customers and markets served (C) product and service offerings; (D) distinctive competencies or skills unique to a company; and (E) values and culture that serve as the foundation for any organization.

       
Within these broad categories are 70 different issues that were discussed by SCJ leadership before forming its strategy of 21 elements. Our consulting team investigated dozens of potential real estate responses within the context of the quality, cost, quantity, technology, location and practices for providing space. In the end, every last real estate strategy is documented in terms of its ability to align with and reinforce a specific core business strategy (see Figure 2).

       
Principle 2: Planning models should emphasize activities, functions, and performance concepts over the more typical counting and cataloguing of prescriptive data and wish lists.

       
The overarching theme for the new SC Johnson facility was “The Entire Building is Your Workplace”. This concept reflects a major transformation in the organization toward multidisciplinary, collaborative work processes, which drove a move from 60 percent enclosed offices to an open, multidisciplinary workplace setting. Supporting the open environment are informal and formal, open and enclosed, individual and team oriented-places previously reserved for private offices.

       
Arriving at this solution was not based on typical cataloguing of how much space each individual gets based on their level in the organization. Instead, requirements were generated via a thorough understanding of current and projected, individual and team, functional work patterns.

       
Today, a series of straightforward, performance-based profiles continue to be used to determine individual and group space requirements.

       
Principle 3: Planning outcomes should be measured in core business terms, rather than strictly as real estate statistics.

       
SCJ developed the 21 elements of their strategy as internally consistent, cause-and-effect relationships. As our team presented real estate responses, each was linked to a specific core business strategy. Thus, senior SCJ leadership was making a commitment to real estate as an integral part of organizational outcomes.

       
Is the degree of organizational/real estate alignment a precise correlation? Can the relationships be proved empirically? No, on both counts. Instead, the real value is getting senior leadership together around strategic issues that are clearly portrayed as a series of interrelated elements, including real estate. As one element is altered, the other parts must be examined and, most likely, refined.

       
The last few years have generally been positive ones for SCJ Commercial Markets. As their business model has evolved, refinements have been made to their overall strategy and measures for success, including real estate. The Strategy Alignment Content Component helps frame the key real estate issues in a language spoken by the core business.