Strategy vs. Implementation: The Reality Gap

by: Andrew Ubben, Chief Strategy Officer

We’ve all had our “aha!” moments–instances that reveal an opportunity for change, or insights that help shape new perspectives. At RES, we embarked into the world of location strategy nearly a decade and a half ago – and it was in those first years that we had our “aha!” moment, one that fundamentally changed the way we approach analytics for strategy development.

We met with a large national client with a portfolio of over 2,000 retail locations. They were challenged with the usual: finding opportunities for growth and repositioning of a legacy portfolio in a competitive, changing environment. They surprised us by disclosing they just wrapped up a costly (he cringed), portfolio-wide analysis with another consulting group a few months earlier! Naturally, we had to ask:

“Why do you need us then?”

In response, the client went to his office cabinet, grabbed a massive binder, and dropped it on the table between us. The table shook under its weight. He opened it halfway and drew his finger across the rows and rows of statistical values on the page. Page after page, more of the same–variable lists for regression models, weightings, rankings and scores. Very technical, very impressive for us young data geeks. After a pause, we asked why he was sharing this with us. His response?

“It’s a ton of work.  And I’m sure it’s all accurate. But it doesn’t tell us anything we need to know and certainly doesn’t prompt us to act.”

We quickly realized they got what they paid for, but they didn’t get what they needed.

He explained that they were a real estate and delivery team, and the real decision makers were business executives. Nobody responsible for bringing strategies to life were data scientists. The analysis spoke the language of site scores, weighted matrices and degrees of confidence. The decision-makers spoke the language of revenue, expense, customer volume, site availability and staffing. This was lost in translation. The hand-off was fumbled. The analysis didn’t provide what they needed, patience and time ran out, and they gave up.

That was a defining moment for us. We call it the “The Reality Gap”. It altered our perspective: When it comes to data-driven strategies, you can’t settle for a technical deliverable. For it to be truly effective, you must translate it and make it consumable for the true end users–the real estate executive, the business unit lead, the transaction manager, the capital committee, the executive team.

Since that moment, we have worked hard to keep our strategies relevant and impactful, and thereby bridge that gap in three key areas:

  1. Know the core business. Work with the client to understand what drives their definition of success. The more immersed you are in the fundamentals of their business and industry, the better you can represent the market factors that will affect performance. Time and time again, we see attempts to force pre-existing models into new problems. Repurposing is not optimal–the problem should drive the solution, not the other way around. Without an understanding of the business model, you’ll be at a disadvantage. An analysis performed in a vacuum will not withstand the test of practical reality. Work with the client in advance to understand the drivers and make that a core part of every project.
  2. Know the people and process. How decisions get made is different in every organization. For those creating data-driven strategies, it’s easy to assume that you don’t have a place at the table. This is absolutely not true. Being immersed in the business and understanding the decision process and the parties involved at each step is critical. Expect to be a part of presentation and facilitation at each of the gates and take the extra step to align analysis deliverables accordingly. Don’t rely on the client to extract the message because doing so might complicate the process. The goal is to make things clearer and quicker, and you can accomplish this by making sure the message is clear and poignant. Remember, the purpose is to arm the client with the information needed to make sound decisions. Knowing the venue, the audience and being a part of that process is critical to telling that compelling story.
  3. Keep it flexible. Even the best location strategies clash with operational and market realities. They manifest themselves during the approval process and continue for as long as implementation takes place (years and beyond). This is unavoidable. Ideal opportunities on paper simply might not mesh with actual realities–real estate availability, costs, changing business priorities, and a myriad of other factors. Keeping pace with change is key to keeping the process moving. This means the ability to reposition components and modify scenarios, and equally as important, proactively recognizing the ongoing need for such flexibility throughout the process. A common misconception is that the deliverable is a one-time deal–a product, or a finished strategy. In reality, the deliverable ends only when the last recommendation is acted on, often years later, if ever.
    We often think back to that client encounter over a decade ago. While it makes for an amusing story, it is a constant reminder that the space between developing a strategy and its implementation is an often overlooked critical gap. Neither should exist in a vacuum, but it’s surprising how often each individual component gets focus without attention to the necessary linkage between the two.

    At RES, we believe the best place to bridge the gap is at the start, by designing strategies with its inheritors in mind. Although we and the internal strategy groups we support do a great job of reacting to change, we ultimately discovered that the best people to dictate the pace of change were the end users themselves, and decided to arm them with powerful, self-service tools! That is why we developed STRATUS, a cloud-based location analytics strategy tool as a direct answer to this problem.  Aside from the obvious benefit to our clients, it’s helped prevent us from becoming someone else’s “aha!” moment!

    ABOUT THE AUTHOR

    As CSO of Real Estate Strategies, Andrew is responsible for all client strategic consulting activity nationwide. Andrew provides expertise in the development and delivery of strategic solutions for client real estate portfolios and has vast expertise across a number of industries including healthcare, retail, telecom, oil & gas, industrial, wholesale and others. 

    For more information, please contact:  andrew.ubben@restrategies.com