Abstract
Purpose The purpose of this paper is to identify the variables that influence corporate real estate (CRE) decision-making and gauge their relative importance to each other, thereby understanding the consequent challenges/implications for CRE managers (CREM’s). Design/methodology/approach Interviews were undertaken with experienced CREM’s using the causal network elicitation technique to create decision networks for the variables they considered for the specifically defined scenario: dealing with surplus property from a change of business strategy. These networks illustrate the complexity of the mental representations required for the realignment of the CRE portfolio. The key variables are more extensive than alignment theory suggests, namely, financial stakeholders. Additional variables identified include risk, lease accounting, costs, financial analysis, business metrics and motivational drivers. The latter indicates the importance of self-esteem and peer recognition for CREM’s and financial benefits for the C-suite. Accordingly strategy alignment needs to incorporate CRE both in terms of strategy creation and implementation. Findings These networks illustrate the complexity of the mental representations required for the realignment of the CRE portfolio. The key variables are more extensive than alignment theory suggests, namely, financial stakeholders. Additional variables identified include risk, lease accounting, costs, financial analysis, business metrics and motivational drivers. The latter indicates the importance of self-esteem and peer recognition for CREM’s and financial benefits for the C-suite. Accordingly, strategy alignment needs to incorporate CRE both in terms of strategy creation and implementation. Originality/value This research appears to be the first that looks in detail at the mental representations used by decision-makers while making CRE decisions.
Highlights
Business strategy reflects the environment a business operates in, previously it was relatively stable but has become fluid and less predictable
Strategic agility requires Corporate real estate (CRE) to have the capability for dynamic alignment but there appears to be a “disconnect between the CRE and business strategy” (Cooke et al, 2019a, p. 184) as the existence of surplus leasehold property indicates a lack of dynamic alignment capability (Cooke et al, 2019b)
It does so by using causal network elicitation technique (CNET) to investigate the mental representations (MRs)’s of decision-makers when they are presented with the problem of portfolio realignment
Summary
Business strategy reflects the environment a business operates in, previously it was relatively stable but has become fluid and less predictable. The environment is Corporate real subject to turbulence and unpredictability (Ramirez and Wilkinson, 2016), estate decisionbusiness strategy frequently requires radical adjustment. Strategic agility comprises both the strategy content and its implementation, the latter necessitating resource agility to facilitate the making recalibration of commitments (Doz and Kosonen, 2010). Corporate real estate (CRE), property that a firm occupies for its own purposes, is frequently the second largest cost and resource and has the potential to significantly impact competitiveness. Strategic agility requires CRE to have the capability for dynamic alignment but there appears to be a “disconnect between the CRE and business strategy” The definition adopted is to apply CRE “in an appropriate and timely way and in harmony with business strategies, goals, and needs” (Luftman and Brier, 1999, p. 109)
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